Ryanair bets on quick post-Covid recovery in 2021

Ryanair, Europe’s biggest no-frills airline, is set for its first loss since 2009, but expects a rapid rebound in 2021. Is it being too optimistic? Matthew Partridge reports

Ryanair cabin crew
Ryanair hopes to exploit rivals’ troubles
(Image credit: © Ryanair)

Ryanair says it is undergoing the “most challenging” year in its 35-year history, say Kalyeena Makortoff and Gwyn Topham in The Guardian. Europe’s biggest no-frills carrier is heading for an annual loss of nearly €1bn (£880m) in the year to 1 April. The decision of many families to stay at home, combined with the new wave of travel restrictions announced in the weeks before Christmas, cut traffic by 78% year-on-year in the final three months of 2020. Further restrictions announced since then, along with European lockdowns, put it on track for a full-year net loss of between €850m and €950m. That would mark the airline’s first year in the red since the global financial crisis in 2009.

This isn’t the first time in the last year that CEO Michael O’Leary has had to lower expectations, says Robert Lea in The Times. In fact, he has had to reduce predicted passenger numbers no fewer than seven times, from 100 million in May to between 26 million and 30 million just after Christmas. The airline now thinks that the final number could be even lower, with “more risk towards the lower end of the range”.

Rivals will suffer more

Things may be tough at present, but Ryanair is not alone in its misery, says Philip Georgiadis in the Financial Times. European airlines “are bracing themselves for a tough few months as governments try to stop people travelling to contain the spread of new variants of the virus”. EasyJet said last week that it “would fly just a tenth of its normal schedule in the first quarter of 2021”. Ryanair is also better placed than its rivals to weather the storm as it has “one of the strongest balance sheets and lowest costs in the industry”.

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O’Leary may essentially have written off the two months to the end of March, but he is far more upbeat about Ryanair’s next fiscal year, says Simon Calder in the Independent. He is not only confident that growth “will soon return” as the virus recedes, allowing it to “rapidly restore schedules” and “recover lost traffic”, but he also predicts that there will be “extraordinary pent-up demand”. As a result, Ryanair is already planning to expand in Italy and northern France, while reopening its base at Shannon in the west of Ireland in the summer of 2021.

Not so fast, says Simon Foy in the Daily Telegraph. O’Leary is clearly hoping that Ryanair can “capitalise on the many growth opportunities” after the pandemic and take advantage of the fact that competitor airlines “have substantially cut capacity or failed”.

Still, his vision of a “dramatic recovery” in airline travel this summer looks a touch optimistic given that the EU’s inoculation programme “remains in turmoil”, hampering their ability to loosen travel restrictions. And even the British government has warned that summer 2021 may be “very similar” to the last one.

Dr Matthew Partridge

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri