16th Mar 2020 10:35
(Alliance News) - Ryanair Holdings PLC on Monday said travel restrictions imposed by governments to curb the spread the new coronavirus are hurting its operations.
Shares in Ryanair were down 20% at EUR8.45 in London in morning trading.
The Irish budget airline said it expects these restrictions to result in the grounding of the majority of its aircraft fleet across Europe over the next seven to ten days. For April and May, Ryanair said it now expects to reduce its seat capacity by up to 80%.
Ryanair said it is taking immediate action to reduce operating expenses, and improve cash flows, which includes grounding surplus aircraft, deferring all capital expenditure and share buybacks, freezing recruitment and discretionary spending, and implementing a series of voluntary leave options, temporarily suspending employment contracts, and significant reductions to working hours and payments.
The airline noted that it has "strong" cash and cash equivalents of over EUR4 billion as at Thursday last week.
"We have seen a substantial decline in bookings over the last two weeks, and we expect this will continue for the foreseeable future. We will continue to monitor demand, as well as government flight restrictions, and we will continue to make further cuts to schedules as necessary," Ryanair said in its statement Monday.
Earlier on Monday, International Consolidated Airlines Group SA, easyJet PLC and Wizz Air Holdings PLC also warned of major disruptions to their operations.
British Airways parent IAG said its first-quarter capacity, or available seat kilometres, is expected to fall 7.5%. In April and May, IAG will reduce its capacity by about 75% compared to the year before. IAG also is planning to ground surplus aircraft.
As at March 12, IAG had cash, cash equivalents and interest-bearing deposits of EUR7.35 billion. In addition, undrawn general and committed aircraft backed financing facilities amount to EUR1.9 billion, resulting in total liquidity of EUR9.3 billion.
easyJet also said it has undertaken further "significant" cancellations amid reduced levels of customer demand.
easyJet currently has GBP1.6 billion cash balance, an undrawn USD500 million revolving credit facility and unencumbered aircraft worth in excess of GBP4 billion. The company has no debt re-financings due until 2022, it noted.
Meanwhile, Wizz Air said that it has suspended all flights to Poland until further notice due to the Polish government's decision to impose travel restrictions imposed on all foreign flights. Wizz Air said it has EUR1.3 billion of free cash.
The announcements in London mirrored those in the US and Europe over the weekend, after US President Donald Trump's administration banned foreign travellers arriving from Europe.
American Airlines Group Inc said it would reduce all international capacity by 75%. It also said domestic service would be reduced by 20% in April compared to last year.
Delta said it would "significantly reduce its US to Europe flying beginning Monday, March 16, following the US government directive restricting travel between the US and Europe."
Southwest Airlines said it "will likely make service reductions based on demand".
Germany's flagship carrier Deutsche Lufthansa AG said its flight schedule will be reduced by up to 70% over the next few weeks, along with other cost savings measures. It said this was in response to a 50% drop in new bookings over the past week, compared to a year before.
By Tapan Panchal; [email protected]
Updated by Evelina Grecenko; [email protected]
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