European low-cost carrier Ryanair has posted its largest annual loss to date. The airline group logged a full-year loss for 2020/21 of €815 million ($990 million) amid plummeting passenger numbers and a difficult operating environment. Nevertheless, the group CEO Michael O’Leary foresees a strong recovery in the second half of the year, warning of price rises in summer 2022 and calling on travelers to book their bargains now.
Ryanair’s record full-year loss
Low-cost airline group Ryanair has posted a historically bad result for the full year 2020/21 today. Across its four airlines – Ryanair DAC, Malta Air, Lauda and Buzz – the group posted a loss of €815 million ($990 million). In a statement, the Ryanair Group described its ‘most challenging year ever’, saying,
“FY21 was the most challenging in Ryanair’s 35-year history. Covid-19 saw traffic collapse, almost overnight, from 149m to just 27.5m as many European Govts. (with little notice or co-ordination) imposed flight bans, travel restrictions and national lockdowns.”
While the group saw a partial recovery in summer 2020, the second wave put pay to any hopes of a better winter, leaving the airline struggling for passengers. Over the full year, passenger traffic declined from 149 million in 2020 to just 27.5 million by the end of this March, a drop of some 81%.
Notably for Ryanair, an airline that survives on its high load factors, its planes were flying on average 71% full, compared to 95% full in the previous year. Nevertheless, a load factor of 71% is not too bad considering the environment in which it was operating, and is testament to the group’s keen management of its capacity.
Although the result is understandably poor, the airline states that it is encouraged by vaccination rates and that it hopes to see a strong recovery in the back half of this year. It says that,
“If, as is presently predicted, most European populations are vaccinated by Sept., then we believe that we can look forward to a strong recovery in air travel, jobs and tourism in H2 of the current fiscal year (FY22).”
The group notes that it expects traffic to remain low throughout the first quarter, but expects a strong recovery to allow it to break even by the end of the current financial year. It notes that this is a cautious prediction, which is somewhat reliant on the easing of intra-European travel restrictions in time for the peak summer period.
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Book now for bargain fares
Following its earnings release, Ryanair Group CEO Michael O’Leary spoke with BBC Breakfast about his airlines’ performance and its outlook for the future. Noting that it had been a difficult year, he projected that there would be a rebound this summer to some extent, and a more meaningful recovery next summer 2022.
However, he warned of reduced capacity in the European network, and stressed that this would likely lead to higher prices across airlines. He said,
“In Europe and in the UK when we come back, there will be about 25% less seats than there was before. We’ve seen Thomas Cook has gone bust, Flybe has disappeared, Germanwings, Level … Alitalia and TAP in Portugal have reduced their fleets by a quarter, so there is going to be less seats available when we finally emerge out of the COVID-19 crisis.
“I think the risk is that fares are likely to be higher, not in the summer of 2021 but into the summer of 2022 … There’s no doubt in my mind that prices will rise, particularly during the peaks of the bank holiday weekends, the school holiday travel period, but that won’t affect bookings for summer 2021 and in 2021, prices will never be cheaper.”
O’Leary noted that, because airlines are currently dealing with lower advanced bookings than they were used to because of travel restrictions, prices are currently at a historical low. His message is clear, that passengers should book early to avail of these cheap fares, and that we should brace ourselves for higher flight costs as the industry emerges from the pandemic.
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