18th May 2020 06:54
(Alliance News) - Ryanair Holdings PLC on Monday reported a rise in earnings and traffic in its recently ended financial year which was largely unaffected by the Covid-19 pandemic that has since battered the airline sector.
The Irish budget carrier yet again took aim at "state aid doping", reaffirmed its bleak traffic expectations for the second quarter of the new year, and said it expects a EUR200 million loss in the first quarter.
Revenue in the financial year that ended March 31 was 10% higher annually at EUR8.49 billion from EUR7.70 billion. Pretax profit, however, was down by 29% year-on-year to EUR670.3 million from EUR948.1 million.
Weighing on Ryanair's profit was a EUR407.2 million charge for fuel hedge ineffectiveness. Without taking that accounting hit, pretax profit would have come in 14% higher at EUR1.08 billion. The bulk of the ineffectiveness costs were in relation to the Covid-19 pandemic.
"The widespread grounding of aircraft as a result of European Union governments reactions to the spread of Covid-19 means that the group will operate a significantly reduced flying schedule in financial 2021 compared to what was originally expected. Therefore, the group is recording an exceptional hedge ineffectiveness charge of EUR392 million, net of a tax credit, in relation to financial 2021 jet fuel hedges," Ryanair explained.
Back to the recently ended financial year, Ryanair's total number of passengers climbed 3.8% to 148.6 million, though its load factor slipped slightly to 95% from 96%.
The fuel bill was 14% higher at EUR2.8 billion, amid higher prices during the year and the rise in traffic.
Ryanair added: "Financial 2021 will be difficult for the Ryanair Group as its airlines work hard to return to scheduled flying following the Covid-19 crisis. Unlike many flag carrier competitors, Ryanair will not request or receive state aid.
"When group airlines return to scheduled flying from July, the competitive landscape in Europe will be distorted by unprecedented quantums of state aid."
Ryanair noted Deutsche Lufthansa AG has taken EUR12.4 billion in aid, and recently renationalised Alitalia has received EUR3.5 billion in government assistance. With large war chests for these rivals, Ryanair said it expects below-cost selling in the year ahead.
Ryanair earlier in May said it could slash up to 3,000 jobs as the Irish budget airline embarks on a restructuring in response to destructive effects of Covid-19.
The carrier also confirmed it expects to carry no more than 50% of its original traffic target of 44.6 million in its financial second quarter, from July to September.
Ryanair expects to operate fewer than 1% of its scheduled flight programme in April, May and June - its first quarter. It expects a EUR200 million loss in the first quarter, with a reduced loss in the second.
The company also added it is in talks with Boeing Co to cut planned aircraft deliveries, "to reflect slower traffic growth post Covid-19 in 2020 & 2021".
"The group currently expects to carry less than 80 million passengers in financial 2021, almost 50% below its original 154 million target," Ryanair said.
Monday's was the last annual report the carrier publishes with David Bonderman as chair;he steps down on June 1 and will be replaced by Stan McCarthy, currently deputy chair.
In London on Friday, Ryanair shares closed 1.7% lower at EUR8.45 each.
By Eric Cunha; [email protected]
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