Ryanair grew 13% last fiscal year, considers shutting down Laudamotion in Vienna

18.05.2020 at 12:32

Travel news

Ryanair Holdings plc today (May 18) reported a full year profit of €1,002m (exclusive hedge ineffectiveness), compared to €885m last year.

Highlights include:

  • Traffic grew 4% to 149m guests.
  • Revenue per guest rose 6% to €57 (2% higher fares & ancillary rev. up 16%).
  • Over 90% of flights arrived on-time (excl. ATC delays).
  • EU’s greenest, cleanest airline (66g CO₂ pax/km).
  • 5 new bases & 390 new routes.
  • Malta Air became 4th Group airline.
  • New digital platform launched with improved, personalised, guest offers.
  • Strong balance sheet & liquidity.

Ryanair’s statement about last fiscal year and complaint about current state aid to other airlines:

Most of Ryanair’s fleet was grounded from mid-March by EU Government flight bans and restrictions.  These groundings reduced our March and full year traffic by over 5m guests and cut FY20 profits by over €40m.  As updated on 1 May, Ryanair expects to operate less than 1% of its scheduled flying programme in Q1 (Apr. to June). 

Some return to flight services is expected in Q2 (July-Sept.) and Ryanair expects to carry no more than 50% of its original Q2 traffic target of 44.6m, as bookings will be impacted by public health restrictions (temperature checks and face coverings for passengers and staff) and quarantine requirements. 

When Group airlines return to scheduled flying from July, the competitive landscape in Europe will be distorted by unprecedented quantums of State Aid (in breach of EU rules) under which over €30bn has been gifted to the Lufthansa Group, Air France-KLM, Alitalia, SAS and Norwegian among others. 

We therefore expect that traffic on reduced flight schedules will be subject to significant price discounting, and below cost selling, from these flag carriers with huge State Aid war chests.”

Ryanair also considers shutting down its brand Laudamotion in Vienna base due to strong competition with Austrian Airlines which benefit from state aid from Austrian government.

Ryanair comments it in the statement:

“Lauda underperformed in FY20 with fares lower than expected, due to intense price competition from Lufthansa subsidiaries in its core Austrian and German markets. FY20 traffic, however, grew to 6.4m at high load factors.  In April, David O’Brien (former Ryanair CCO) joined the Lauda management team as Joint CEO.

Due to Covid-19 restrictions, the Lauda fleet has been grounded since March 17.  With costs running ahead of other Group airlines and Lauda’s main competitor, Austrian Airlines, expected to receive an €800m State Aid bailout, Lauda has had to completely rethink its strategy and significantly lower its growth plans.  Its management team are implementing restructuring and cost cutting plans and are currently in discussions with its people and its unions in relation to staff savings to secure the future of its Vienna A320 base.  

Failure to agree meaningful cost reductions on May 20 will result in the Vienna A320 base being closed on May 30 with over 300 job losses.  Lauda has already abandoned plans to operate a base in Zadar for the Ryanair Group.”

This would be a really bad news for all fans of low cost travelling as Ryanair/Lauda currently offers really cheap flights from Vienna to tens of airports all across Europe.

It will be a tough fiscal year for Ryanair as for any other airline. The company currently expects to carry less than 80m passengers in FY21 (almost 50% below its original 154m target).

Ryanair however still keeps a substantial amount of cash on books in comparison to other airlines, which often have next to nothing in cash. Ryanair’s current cash balance is reported to be €4.1bn according to the airline.

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