Ryanair to cut 3,000 jobs, warns of slow recovery

Ryanair said it was planning up to 3,000 job cuts as it forecast the airline business would take at least two years to return to pre Covid-19 conditions.

The job cuts will affect about 17% of Ryanair's workforce and will cover pilots, cabin staff and other workers. The budget carrier said it was also planning to put employees on unpaid leave and cut pay by up to 20%.

The company said it could close a number of aircraft bases across Europe until traffic recovers. Chief Executive Michael O'Leary has extended his 50% pay cut from April and May until the end of the financial year.

"Ryanair now expects the recovery of passenger demand and pricing (to 2019 levels) will take at least two years, until summer 2022 at the earliest," the company said. "The Ryanair airlines will shortly notify their trade unions about its restructuring and job loss programme, which will commence from July 2020."

The group said it expected to operate less than 1% of its scheduled flights in April, May and June. In the company's second quarter, ending in September, it expects to carry no more than half its traffic target of 44.6m passengers. For the year to the end of March it expects to carry less than 100m passengers, more than 35% less than target.

Ryanair said the return to 2019 demand and fares would be slowed by more than €30bn (£26bn) of state aid provided by Germany, France and Italy to their national airlines. It said the state aid was one of the reasons for such large job cuts. Ryanair said the state aid was illegal under EU law and it would challenge it in EU courts.

"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 said.

The Dublin-based airline attacked state support for its rivals as International Airlines Group announced the Spanish government had guaranteed €1bn of loans its Iberia and Vueling divisions. Ryanair included IAG's request for the support in its list of state aid.

Ryanair said it expected a net loss of more than €100m in the first quarter with further losses during what should be its peak trading period in the second quarter. The company said it had almost €4bn of cash before the crisis and that it was managing its resources to survive.

William Ryder, equity analyst at Hargreaves Lansdown, said: "Ryanair is forecasting lower demand for some time following the lockdowns, prompting a restructuring programme and job losses. The group’s financial losses are beginning to mount …Ryanair’s balance sheet was strong coming into this crisis but it would be reassuring for investors if we knew exactly how quickly the group’s burning cash."