Ryanair, Europe's financially strongest airline, has warned about the potential for a bleak winter scarred by a second wave of the Covid-19 disease, increasing the gloom for airlines facing once again into travel bans and quarantines.
The airline was insulated going into the pandemic crisis by its huge cash pile, which has, after all, risen to almost €4bn, and has had tough talks with pilots in Germany and Ireland, who two years ago held the upper hand as European passenger numbers soared.
However, unveiling a hefty €185m loss in the three months to the end of June, in contrast to the profit of €243m earned in the same quarter in 2019, the airline did little to play down the Covid-19 threat.
The quarter was its "most challenging" in 35 years, saying it hopes, at best, to be operating 70% of a normal schedule in September, as the numbers flying again recover gradually from the almost total lockdowns. The shares fell 4.5%.
And it gave little indication that the summer would improve for the industry as quarantines for tourists are re-imposed and Covid outbreaks flare in some tourist hotspots such as Catalonia.
"It is impossible to predict how long the Covid-19 pandemic will persist, and a second wave of Covid-19 cases across Europe in late autumn when the annual flu season commences is our biggest fear right now," the airline warned.
Group chief executive Michael O’Leary said Ryanair had seen a hit to bookings in recent days in the wake of a surge of infections in Barcelona and expects “more of those kind of developments”.
The effects of the disease in the quarter were stark. The €2.3bn generated in revenues in the same 2019 quarter shrunk to a negligible €125m this year.
The lockdowns and an almost totally grounded fleet meant it carried only 500,000 passengers in the quarter compared with almost 42 million a year earlier.
And it said it will likely carry only 60 million passengers for its current year which runs to the end of March 2019, sharply down from 149 million in an earlier forecast.
The airline again railed against the bailouts from EU governments for rivals, including Air France-KLM, Lufthansa, SAS, and TAP, which it characterised as illegal under EU state aid rules.
We will challenge this illegal State Aid to TAP in the European Courts and will continue to campaign for a level playing field in Portugal for all airlines who are creating jobs and bringing millions of visitors to Portugal. pic.twitter.com/9jdwPtmyfc— Ryanair Press Office (@RyanairPress) July 3, 2020
And on the outlook for the industry, it said: "Many other airlines are cutting capacity, with the result that air travel in Europe is likely to be depressed for at least the next two or three years."
The airline had little to say about Irish jobs and routes, although it said it has deals with both their pilots and cabin crew in Ireland.
In Germany, Ryanair will consider reversing a decision to close up to three German bases after pilots at the weekend signed up to the pay cuts, Mr O’Leary said.
In a note, Goodbody analyst Mark Simpson said the positive headline was it having increased liquidity, to €3.94bn.
But he said: "The forthcoming winter season looks foreboding for even the strongest operators, suggesting that there is little upside to Ryanair until we get into the real recovery in their operations in the early spring of next year."
Additional reporting Conor Humphries at Reuters