By Conor Humphries
DUBLIN (Reuters) – Ryanair <RYA.I> cut its annual passenger traffic target by another 20% and warned it will look at pulling out of some airports across Europe as it booked a 13% rise in annual profit after tax on Monday.
The Irish low-cost carrier, Europe’s largest, said it expects to fly “somewhere under” 80 million passengers in the coming year, down from a target of 100 million given last week and from an original target of 154 million.
CEO Michael O’Leary admitted it was essentially guesswork at this stage.
“For the next 12 months it’s obviously impossible for us to today to give you any guidance on either traffic numbers or on profits,” O’Leary said in a video presentation.
“We have no idea because it is entirely subject to passenger numbers, yields and the lifting of government restrictions.”
Ryanair reported a profit before tax of 1 billion euros ($1.08 billion) for the year to March 31.
Ryanair <RYA.I> shares opened up 4% at 8.82 euros.
O’Leary said the airline would first look at loss-making bases in the UK, Germany and Spain for closure, but may then look at Italy, Belgium and central and eastern Europe if necessary.
It is also likely to close the main base of its subsidiary Lauda in Austria, which is undergoing an “existential crisis” due to COVID-19, he said.
Ryanair is currently undertaking a major cost cutting drive, with 3,000 pilots and cabin crew likely to lose their jobs as well as 250 people at head office.
Ryanair expects to post a loss of “just over” 200 million euros in the three months to the end of June and either break even or post a small loss for July-September, O’Leary said.
He admitted to having “no visibility” on customer behaviour but said he expected demand to return pretty quickly on deep discounting.
Pre-crisis ticket price levels will not return until 2022 “or later”, O’Leary said.
The airline last week has said it expects a surge in bookings in the coming weeks from people who have been cooped up at home for months.
While there has been an increase in searches for sun holidays in recent days, it remains “early days” to gauge that demand, Chief Financial Officer Neil Sorahan said in an interview.
CASH BURN FALLS
Ryanair reported a current cash balance of 4.1 billion euros and said its weekly cash burn has dropped to just over 60 million in May from around 200 million euros in March.
The airline booked an exceptional charge of 353 million euros for hedging on fuel and currency hedges it put in place last year which it did not need.
That includes foreign exchange hedges worth around 40 million that offset some of the losses caused by hedging at high prices.
The airline is “sitting on the sidelines” for now in terms of hedging future fuel bills, Sorahan said.
(Reporting by Conor Humphries; editing by Christopher Cushing and Jason Neely)