Ryanair ‘essentially’ cancels operations until Europe can improve deployment of its COVID vaccine

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Ryanair Holdings Plc. is counting on a rapid rollout of coronavirus vaccines to trigger a wave of travel at the end of the summer and help the low-cost carrier recover from an annual loss that could reach 950 million euros (1.1 billion dollars).

While Easter is “essentially a cancellation,” passenger numbers can rebound to between 50% and 70% of normal levels in the peak months of July through September, as more people get the hang of it, said general manager Michael O’Leary in an interview. On Monday.

“You’re going to see a dramatically accelerated vaccination rate across the European Union,” O’Leary told Bloomberg TV. “This is the time when we are released from these restrictions. Short-haul travel will recover strongly and quickly. There is a huge suppressed travel demand in Europe. “

European airlines are in dire straits, with the travel collapse lingering after a full year of crisis. Prospects for a rebound depend on a slow vaccine rollout so far, while new strains of the virus have kept the number of cases stubbornly high.

Ryanair, Europe’s largest low-cost airline, plans to carry as few as 26 million people in the fiscal year ending March, up from 149 million in fiscal 2020. Governments have responded to the news virus outbreaks with stricter rules and told citizens it was premature to book. summer holidays.

The Irish carrier fell 3.9% and 0.9% at 8:18 a.m. in Dublin. Air France-KLM rose 2.5% after Finance Minister Bruno Le Maire said more aid to the carrier would come after the country’s tightening restrictions.

Cautious view

Sanford C. Bernstein analyst Daniel Roeska said that while Ryanair has provided “little evidence that investors can expect better fortunes,” the carrier’s low-cost base means it is “recovery oriented and will be able to capture market share while other airlines remain in debt.” loaded and slow.

O’Leary has said he may need to rethink his optimism about the pace of a recovery if vaccination programs are delayed or prove unsuccessful, but current scenarios point to a recovery until the end of 2021 and a stronger rebound next year.

The CEO said Europe has been slow on vaccinations but most of the continent could still be protected by September. Eurocontrol, the region’s air traffic control agency, said last week that flights could drop another 55% to 70% from 2019 levels in June.

In France, the government has imposed stricter rules on travel to avoid a third national lockdown.

As of Sunday, the country sealed its border for travel between countries outside the European Union, except for extenuating circumstances, and requires negative Covid-19 tests for anyone entering France, including the within the EU, and by any means of transport.

“Air France will need additional support, the State will provide additional support,” Le Maire said on RTL radio. Last year, the airline received a total of € 10.4 billion in direct loans and guarantees from France and the Netherlands and has been in talks with the two governments for another package.

Winter bust

Ryanair reported a net loss of 306 million euros in the third quarter ended December 31, after border restrictions and lockdowns wiped out much of the usual wave of Christmas travel. The number of passengers on the Dublin-based carrier in December fell 83% to just 1.9 million people, he said in a statement.

CFO Neil Sorahan said Ryanair had around € 3.5 billion in cash at the end of December, with “a lot of options available”, including bond markets at attractive prices , in case of need to raise funds.

The CFO said he was hoping for a higher capacity version of Boeing Co.’s 737 Max will be certified by the end of February or early March, with 24 deliveries slated for next summer. The plane, grounded for nearly two years after two fatal crashes, was cleared for flight by European regulators last week.

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