Update 1 May: The British Airline Pilots Association’s
(BALPA) general secretary Brian Strutton said: “There has been no warning or
consultation by Ryanair about the 3,000 potential job losses and this is
miserable news for pilots and staff who have taken pay cuts under the
government job retention scheme. Ryanair seems to have done a U-turn on its
ability to weather the Covid storm. Aviation workers are now facing a tsunami
of job losses. The UK government has to stop daydreaming and keep the promises
made by the chancellor on 17 March to help airlines or this industry, vital to
the UK economy, will be devastated.”
Low-cost carrier Ryanair said it does not expect to return
to “meaningful flying” until July and has predicted it will take two years for
passenger numbers and pricing to reach pre-coronavirus levels, causing it to embark on a restructuring plan that may include cutting up to 3,000 jobs.
The Irish airline expects to operate less than 1 per cent of
its schedule in April, May and June. Even when flying may start returning in
July to September, Ryanair believes it will only carry around 50 per cent of
its original traffic target of 44.6 million passengers in Q2.
Ryanair is now carrying out a fleet review in light of the
potential for reduced demand and is in negotiations with Boeing and Laudamotion’s
A320 lessors to cut the number of planned aircraft deliveries over the next two
years. It said this could reduce its capex commitments.
Due to reduced passenger numbers and the expected grounding
of nearly all flights until at least July, the airline will be notifying its
trade unions about its restructuring and job loss programme due to commence in
July. The plans will affect all of the group’s airlines and could result in up
to 3,000 redundancies, mainly among pilots and cabin crew. It is also
considering unpaid leave, pay cuts of up to 20 per cent for all employees and
the closure of aircraft bases across Europe until traffic recovers.
CEO Michael O’Leary, whose pay was reduced by 50 per cent
for April and May, has also agreed to extend his pay cut for the remainder of
the financial year until March 2021.
Ryanair also took the opportunity to hit out at its
competitor airlines that have accepted state aid, claiming carriers such as
Lufthansa, Air France-KLM, TUI, Alitalia, SAS, Finnair and Norwegian have
benefitted from more than €30 billion. Ryanair claims this is in breach of EU
rules governing state aid “and will distort Europe’s level playing field in
airline competition for many years”.
Lufthansa has so far only confirmed that its Swiss and
Edelweiss airlines might receive €1.4 billion in state-backed loans, while Air
France-KLM recently secured €7 billion from the French government and is in
talks with the Netherlands for up to another €4 billion. The Italian government
was quick to nationalise Alitalia following the collapse of Air Italy and the introduction of strict lockdown measures as the coronavirus rapidly spread within the country.
It added: “Lufthansa, Air France-KLM and Alitalia can now
fund many years of below-cost selling, whereas Ryanair and other well-run airlines
will not request (and would not receive) such state aid. Ryanair will challenge
these unlawful state aid bailouts in the EU courts to protect fair competition
in Europe’s aviation market, which has done so much to lower fares for
consumers over the last 20 years.”
As the coronavirus situation worsened across Europe in
March, EU regulators took the decision to relax its strict state aid rules to give
governments the ability to support their economies. This enabled countries to
grant up to €800,000 to help struggling companies and allowed them to permit
state guarantees to ensure banks would continue offering loans. The latter option
is how most European airlines in receipt of state aid have secured billions of
euros in commercial loans. Usually, the regulations prevent governments from
helping one company over its competitors within the bloc. However, carriers
such as Ryanair and IAG-owned British Airways have so far refused to turn to
their respective governments for help to survive the crisis.
Ryanair believes airlines will have to sell tickets below
cost to stimulate demand once travel restrictions are lifted. It has once again
called on European governments to cut passenger taxes, airport taxes and
departure taxes on an industry-wide basis, hitting out at France for refunding
aviation taxes only to French carriers and not others such as Ryanair, Easyjet
and BA.