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Ryanair is preparing to cut up to 15 percent of its 19,000 workforce, as it becomes the last airline to warn that the aviation industry is facing a slow recovery from the coronavirus disorder.
Europe’s largest low-cost airline said it expected it would take at least two years to return to last year’s passenger demand and price levels as it established plans to cut additional costs.
Michael O’Leary, CEO of Ryanair, said his outlook on the recovery had changed over the past week in light of the € 9 billion bailout Air France-KLM had earned from the French and Dutch governments, and it is expected that Lufthansa’s state aid receives.
He said that “the entire competitive market has now turned completely upside down.”
“The weakest airlines that entered the crisis – Lufthansa, Air France, KLM, Alitalia – that were to go under normal circumstances have to be restructured and reduced now are going to be greatly enriched by this doping of state aid. I think that what We’re facing now is that … they will be able to make life very difficult for well-run airlines like us, BA and easyJet. “
O’Leary said Ryanair had to respond by reducing the size of the airline over the next 12 months. “Unless we have significantly lower costs for the next 12-24 months, we will not be able to successfully operate in a market where air fares will be much lower.”
Ryanair intends to cut up to 3,000 cabin crew and pilot jobs, and introduce salary cuts of up to 20 percent, as well as shutting down a number of aircraft bases in Europe until air travel recovers. O’Leary will extend his 50 percent cut in wages for the rest of the financial year until March 2021.
He said he should probably consider cutting job cuts for a third of his workforce, and that he couldn’t rule out subsequent cuts, but said he was trying to preserve jobs.
Ryanair’s comments come as any optimism about a rapid recovery in the industry is evaporating, forcing carriers to move from laid-off workers to layoffs.
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British Airways on Tuesday revealed plans to cut nearly 30 percent of its 42,000-person workforce after its parent company, IAG, warned that it could take several years to return to 2019 traffic levels. SAS, the Scandinavian airline He said he would permanently cut half – 5,000 – of his staff.
Ryanair said on Friday that it expected to carry no more than 50 percent of its original traffic target of 44.6 million passengers between July and September. For the full year, ending March 2021, it forecasts fewer than 100 million passengers, 35% below its original target of 154 million.
In April, May, and June, it expects to carry only 150,000 passengers, 99.5 percent less than its previous target of 42.4 million passengers.
The carrier said it was also reviewing its growth plans and aircraft orders, adding that it was in “active negotiations” with Boeing and Laudamotion A320 lessors to reduce the number of planned aircraft deliveries in the next 24 months.
The market update comes just a week after O’Leary offered a bullish outlook for a recovery in air travel, outlining plans for the airline to resume 80 percent of flights in September, provided flights in Europe. They can be restarted from the beginning of July. However, he admitted that these planes would have low load factors.
On Friday, O’Leary said there was still a chance that Ryanair could hit 2019 traffic volumes next summer, but said it would take until 2022 for 2019 price levels to return.
He confirmed that Ryanair had also filed a legal complaint with the European Commission about its state aid concerns, and said it would initiate legal action at the end of the month.
