Friday 1 May 2020 9:14 am

Ryanair set to cut up to 3,000 jobs due to coronavirus

Budget airline Ryanair has warned that it might cut up to 3,000 jobs due to the ongoing disruption from the coronavirus pandemic.

The low-cost carrier said that it would begin a restructuring programme in July 2020, with most of the cuts expected to affect pilots and cabin crew staff.

It also said that unpaid leave, pay cuts of up to 20 per cent and the closure of some of its European hubs were all possibilities due to the complete collapse in demand for flights.

Ryanair chief executive Michael O’Leary, whose pay was cut by 50 per cent for April and May, has now agreed to extend this cut for the remainder of the financial year.

The airline said it expected to make an €100m (€87.3m) loss in the first quarter, with further losses expected in its peak summer period.

Shares in the airlines fell 4.7 per cent as markets opened.

Pilots’ union BALPA’s general secretary Brian Strutton said the airline “had done a u-turn on its ability to weather the Covid-19 storm”:

“There has been no warning or consultation by Ryanair about the 3000 potential job losses and this is miserable news for pilots and staff who have taken pay cuts under the Government job retention scheme.

“Aviation workers are now facing a tsunami of job losses. The UK Government has to stop daydreaming and keep to the promise made by the Chancellor on 17 March to help airlines or this industry, vital to the UK economy, will be devastated.”

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Hargreaves Lansdown analyst William Ryder said although the airline has entered the coronavirus shutdowns with €4bn in liquidity, it was unclear how much it had left:

“Ryanair’s balance sheet was strong coming into this crisis, but it would be reassuring for investors if we knew exactly how quickly the group’s burning cash”.

Passenger numbers plunge over 99 per cent

Due to Europe-wide flight restrictions, Ryanair expects to operate less than one per cent per cent of its scheduled flying program in Apr, May and June.

The airline is forecasting traffic of fewer than 150,000 passengers, 99.5 per cent lower than the 42.4m passengers it had budgeted for.

Although flights are expected to pick up from July onwards, Ryanair said that it expects to carry no more than 50 per cent of its original traffic target of 44.6m in the second quarter.

For the full year ending in March 2021, the low-cost flyer now expects to carry less than 100m passengers, more than 35 per cent below its original 154m target.

The airline said it was not expecting passenger numbers to return to 2019 levels until summer 2022 at the earliest.

Ryanair to challenge “unlawful” state bailouts

However, Ryanair has warned that significant price discounting from flag carriers with “huge state aid war chests” will severely distort the aviation market when flying starts again after the coronavirus crisis.

Around £30bn in financial support has been approved by European governments for carriers such as Lufthansa, Air France and Alitalia, who will now be able to “fund many years below cost selling”, Ryanair said in a statement:

“Ryanair expects that its return to scheduled services will be rendered more difficult by competing with flag carrier airlines, who will be financing below cost selling with the benefit of over €30bn in unlawful state aid, in breach of both EU State Aid and competition rules”, it added.

The airline, which has repeatedly called for state aid to be non-discriminatory, said it would challenge these state aid bailouts with the EU “to protect fair competition” in the market.

Ryder said there was some sympathy towards the airline’s complaints:

“It’s going to be that much harder to compete with rivals able to rely on government support.

“Competitors will likely have stronger balance sheets, cheaper access to capital and may even be able to operate below cost for a while as the industry recovers, so we understand why Ryanair’s upset”.