Budget airline Ryanair has joined the list of industry peers to announce deep job cuts with the news that the company is to release 3000 pilots and cabin crew. The figure represents around one sixth of Europe’s largest airline’s total workforce with the step taken after the company concluded that the air travel market would not fully recover for at least 2 years. Ryanair also told investors it doesn’t expect to be ‘properly flying again’, before July.
In a strongly worded statement, Ryanair also accused the European Union of dropping ‘any semblance of fair competition’, during the Covid-19 crisis by the provision of “unlawful and discriminatory state aid”, to national carrier including Lufthansa and Air France-KLM. It vowed to challenge such payments through the European courts.
Ryanair says it expects the grounding of its aircraft between April and the end of June to result in a €100 million loss over the first quarter of its financial year. It is 99.5% down on the 42.4 million passengers it had budgeted for carrying over the period.
And while the Ryanair fleet will start to fly again from July, the company expects it to carry only half of the 44.6 million passengers it had expected to over the key summer quarter, extending losses through to at least September. The company does expect passenger numbers to start to recover through the autumn and winter but expects to end the financial year with passenger numbers down 35% on those planned for.
It forecasts passenger numbers returning to 2019 levels to take until the summer of 2022. The airline’s response has now been to make 3000 employees, primarily pilots and cabin crew, redundant from July, with some remaining staff put on unpaid leave and 20% pay cuts brought into effect across the business.
CEO Michael O’Leary told investors that he believes Ryanair will still not face fair competition with other airlines, stating:
“The expected significant decline in current-year traffic and the impact on fares in Europe . . . will be distorted by competing against legacy airlines who are receiving over €30 billion of state aid, in clear breach of both EU competition and state aid rules.”
Lufthansa and the German airline’s Austrian, Swiss and Belgian subsidiaries, which O’Leary says will benefit from €12.4 billion in state-funded bailouts, along with Air France-KLM, set to receive €10.1 billion from the French and Dutch governments, were singled out for criticism and the threat of a challenge through European courts.
“Consumer confidence will be impacted by public health restrictions, such as temperature checks at airports and face coverings for passengers and staff on board aircraft,” said O’Leary.
“Ryanair expects traffic on reduced flight schedules will be stimulated by significant price discounting and below-cost selling from flag carriers with huge state aid war chests.”
He compared the situation with doping in professional sport and added Ryanair would also be cancelling new aircraft orders and closing many of its bases at different airports around Europe.
The Ryanair share price is down around 40% since mid-February, including a 5% slide during early trading today.