Ryanair is going into hibernation for the winter, operating just two in five of its scheduled services as the second wave of the pandemic envelops the European economy.
Job losses were inevitable, Europe’s busiest airline said. It carried 150 million passengers a year on short-haul services before the pandemic, with its trademark lack of in-flight hospitality, but said it would be cutting the schedule from 60 per cent to 40 per cent through to March.
The decision is effectively a running-up of the white flag by Michael O’Leary, Ryanair’s outspoken chief executive, who during the initial lockdowns and fleet grounding in the spring confidently targeted flying 100 million passengers this year on a schedule running at 80 per cent capacity. He has now said he is aiming to break even and minimise cash burn by carrying 38 million passengers on a winter flight schedule running at 40 per cent, with planes operating 70 per cent full compared with the 90 per cent-plus it ordinarily targets.
“These winter schedule cuts have been forced upon us by government mismanagement of European Union air travel,” he said. He added that Ryanair’s capacity could be “further revised downwards if EU governments continue to mismanage air travel and impose more lockdowns this winter”.
Its main rival at the budget end of the European short-haul market, Easyjet, has said it has cut capacity to 25 per cent through to the turn of the year after reporting that it expects to have lost at least £1.25 billion in its financial year to the end of September.
Mr O’Leary urged member states of the EU to act as one in adapting the European Commission’s proposed air travel “traffic light system”, which envisages unrestricted travel between countries and regions where there are fewer than 50 cases of Covid-19 per 100,000 people. Ad hoc restrictions between countries had, Ryanair said, caused forward bookings to weaken.
It said its capacity-cut would be affected by continuing to run as much as 65 per cent of its routes but with reduced frequencies. Aircraft are being withdrawn altogether from its two west of Ireland bases at Cork and Shannon and also from Toulouse in southern France, with other aircraft being mothballed across Belgium, Germany, Spain, Portugal and Austria.
Ryanair said at the outset of the pandemic that it expected to make 3,000 people redundant. That figure was revised downwards as pilots and crew accepted pay cuts and unpaid leave during the summer, but it will now rise again.
“It is inevitable,” Mr O’Leary said, “given the scale of these cutbacks that we will be implementing more unpaid leave and job sharing this winter in those bases where we have agreed reduced working time and pay.
“This is a better short-term outcome than mass job losses. There will regrettably be more redundancies at those small number of cabin crew bases where we have still not secured agreement on working time and pay cuts.”
Having halved from its early 2020 high of more than €16 each, Ryanair stock had clawed its way back to nearly €13. Shares closed last night down 4.3 per cent at €11.77.