* Ryanair to cut 15% of staff on pandemic disruption
* Sees annual loss, 'anaemic' performance in summer
* Eyes cost cuts from staff to airports to Boeing
* Threatens to delay or cancel some Boeing jets
(Recasts with O'Leary interview)
By Conor Humphries
DUBLIN, May 1 (Reuters) - Ryanair is laying off 15% of its
staff in a cost-cutting drive as coronavirus restrictions
prevent a return to normal service until 2021 and rivals receive
billions in state aid to get back in the air, its chief
executive said on Friday.
The boss of Europe's biggest budget airline nevertheless
vowed in an interview with Reuters that Ryanair would emerge
stronger from the crisis and said crunch talks with Boeing
about the price of jets already ordered and a potential
new order would be key.
Announcing the job cuts on Friday, O'Leary was significantly
more downbeat than two weeks ago when he forecast holidaymakers
would flock back in late summer and pent-up demand might make
2021 a bumper year for earnings.
"Pricing is going to be grim. the competition environment is
going to be grim, I think for the next two or three years," he
said. "We are going to be competing now with airlines that have
received gargantuan sums of state aid and will be able to keep
going forever regardless of any kind of economics."
Ryanair's cutbacks came the same week IAG, which
owns airlines including British Airways and Aer Lingus, said it
was looking to lay off 12,000 staff across the group.
O'Leary said consumer confidence would be hit by public
health restrictions and passenger volumes would be "anaemic
enough" between July and September after an effective
three-month grounding to the end of June.
He said flight capacity in July would be at about 40% and
climb to 60% in August before the return to school effectively
ended the 2020 holiday season.
About 40% to 50% of seats on each flight would probably be
empty and Ryanair was likely to post a loss in both of its key
summer quarters for the first time, O'Leary said. Operating as
normal with less than 10% of seats empty would only return in
the summer next year on the back of very aggressive pricing.
Ryanair said it expected to make a loss in its financial
year ending on March 31, 2021, as it flies 100 million
passengers rather than its original target of 154 million.
'STATE AID DOPING'
Compounding Ryanair's problems is what O'Leary described as
30 billion euros ($33 billion) of "state aid doping" for rivals
in Europe. Ryanair listed 14 airlines that have been given or
promised billions in state aid, such as Germany's Lufthansa
group and Air France KLM.
O'Leary said he would challenge the state aid in court and
expected to win, but the damage would have been done by the time
the rulings were implemented.
"Free competition (that) has transformed air travel in
Europe in the last 30 years is now under grave threat," he said.
Ryanair will begin consultations with unions next week about
up to 3,000 job cuts and a 20% reduction in wages across the
board for remaining employees, according to a memo sent to
pilots on Friday seen by Reuters.
O'Leary also said Ryanair had threatened to close the main
base of its Austrian subsidiary Lauda unless Vienna pilot unions
sign up to lower pay and conditions later this
month.
At the same time as cutting its wage bill, Ryanair is also
demanding lower jet prices from Boeing, it's main supplier.
"We are facing the reality that we will be flying a lot less
passengers in the next 12 months and, over the next two to four
years, we'll be flying a lot more passengers but at much lower
prices," O'Leary said "That is going to have to be reflected in
lower aircraft costs."
He said talks with Boeing included negotiations about both
the price of jets and possible cancellations of existing orders.
Ryanair already benefits alongside U.S. airline Southwest
from clauses guaranteeing the best prices in the
industry for Boeing 737s, industry sources say.
O'Leary said he did expect Ryanair to return to its growth
plans, which envisage flying 200 million passengers per year.
"Our growth plan will always come back on track," he said.
"(Ryanair) will return stronger and more profitable in the next
three to five years, but sadly with a smaller workforce."
($1 = 0.9105 euros)
(Reporting by Conor Humphries; Additional reporting by
Francesca Landini, Tim Hepher and Natalie Thomas; Editing by
David Clarke)
International Airlines (IAG)
