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(Alliance News) - Ryanair Holdings PLC on Friday said it could slash up to 3,000 jobs as the Irish budget airline embarks on a restructuring in response to destructive effects the Covid-19 has had pandemic on travel.
Ryanair also took aim at what it labelled as "state-aid doping", to which the likes of airline Deutsche Lufthansa AG and Anglo-German holiday operator TUI Group AG have turned in the face of the ongoing health crisis.
"As a direct result of the unprecedented Covid-19 crisis, the grounding of all flights from mid-March until at least July, and the distorted state aid landscape in Europe, Ryanair now expects the recovery of passenger demand and pricing to 2019 levels will take at least 2 years, until summer 2022 at the earliest," Ryanair explained.
"The Ryanair airlines will shortly notify their trade unions about its restructuring and job loss programme."
It may result in 3,000 job losses, mainly with pilots and cabin crew, but also pay cuts as high as 20% and the closure of a number of bases across Europe. The latter measure will be in place until traffic recovers, Ryanair noted.
"Job cuts and pay cuts will also be extended to head office and back office teams. Group Chief Executive Officer Michael O'Leary, whose pay was cut by 50% for April and May, has now agreed to extend this 50% pay cut for the remainder of the financial year to March 2021," Ryanair said.
The British Airline Pilots Association on Friday morning issued its response to the planned cuts.
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 to the promise made by the chancellor on March 17 to help airlines or this industry, vital to the U.K. economy, will be devastated."
On Tuesday, International Consolidated Airlines Group SA on Tuesday warned it could make up to 12,000 workers redundant at British Airways.
Dublin-based Ryanair's outlook for its first half and beyond is bleak. Travel restrictions mean its first quarter traffic will be more than 99% lower than initially planned.
It expects traffic of fewer than 150,000 passengers, a fraction of its initial forecast of 42.4 million passengers. It expects to operate fewer than 1% of its scheduled flight programme in April, May and June.
The second quarter, running from July to September, will improve, Ryanair predicted, but its traffic will be a shadow of what it hoped for prior to the pandemic.
"Ryanair expects to carry no more than 50% of its original traffic target of 44.6 million in the second quarter," the company said.
And for the year ending March 2021, Ryanair said it expects to carry not more than 100 million passengers, more than 35% below its initial 154 million target.
Ryanair expects a net loss of EUR100 million in the first quarter, with further losses in the second.
"When scheduled flights return in Europe, sometime in July, Ryanair believes it will take some time for passenger volumes to return. Consumer confidence will be impacted by public health restrictions, such as temperature checks at airports and face coverings for passengers and staff on board aircraft," the company predicted.
Ryanair also expects the market to be fogged by "significant price discounting, and below cost selling from flag carriers". The company said many of these firms have "huge state aid war chests".
Ryanair noted Lufthansa, which it said to date has taken EUR12.4 billion in aid, and recently-renationalised Alitalia.
Ryanair said: "When Ryanair returns to meaningful flying from July, the competitive landscape in Europe will be distorted by unprecedented volumes of state aid from some European Union governments to their 'national' airlines. Currently this amounts to over EUR30 billion.
"All this state aid is in breach of EU rules, and will distort Europe's level playing field in airline competition for many years. Lufthansa, Air France-KLM SA 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."
Elsewhere, Ryanair noted it is in talks with manufacturer Boeing Co to cut the number of planned aircraft deliveries over the next two year, in a bid to cut its costs in a "post Covid-19 world".
"Ryanair entered this unprecedented Covid-19 crisis with almost EUR4 billion in cash, and we continue to actively manage these cash resources to ensure that we can survive this Covid-19 pandemic, and more importantly the return to lower fare flight schedules as soon as possible," the company summarised.
Ryanair shares were 4.4% lower at EUR9.86 each in London on Friday following the announcement.
By Eric Cunha; ericcunha@alliancenews.com
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