Ryanair Chief Touts Robust Summer Outlook Despite Setbacks

(Bloomberg) -- Ryanair Holdings Plc is preparing for a rapid return to air travel in Europe this summer, even as rising coronavirus cases and a flawed vaccine rollout threaten to slow the rebound.

Europe’s largest discount carrier expects to be flying at about 50% of its pre-pandemic capacity at the start of summer, with the figure reaching 80% in the July-September time frame, Chief Executive Officer Michael O’Leary told reporters in an online briefing on Wednesday.

“Everybody is getting very panicked at the moment over international travel but it’s only the middle of March,” O’Leary said. “As the school holidays start through June into July, that will coincide with very high vaccination rates -- not just in the U.K., but also in Europe.”

Airline customers have held off on booking summer holidays during the first three months of the year, depriving the carriers of cash payments they usually use to prepare for the seasonal uptick in business. Uncertainty over when and how travel bans will be lifted has fed into the caution, and O’Leary acknowledged the briefing was meant to give people “reasonable confidence” they can book tickets now.

Ryanair is adding flights in the U.K., where the vaccine rollout is going more quickly than in European Union members like Germany and France, and in sunny destinations like Italy, Spain and Greece, O’Leary said.

Shaken Faith

Airline stocks have faltered over the past week as governments wavered on reopening plans, threatening a repeat of last year’s washout. The trend reversed on Wednesday, with Dublin-based Ryanair rising as much as 4.2% to end a three-day skid totaling 9%.

U.K. Prime Minister Boris Johnson said he’ll update the country by April 5, a week earlier than originally planned, after government officials had earlier cast doubt on a target to resuming air travel as soon as May 17. In Germany, Chancellor Angela Merkel on Wednesday dropped a plan for a five-day Easter shutdown in response to a popular backlash.

O’Leary downplayed concerns over travel, saying that he expected all curbs to be lifted as vaccination rates rose. His airline, which has been criticized over its refund policies, is offering free changes to bookings made between now and October, he said.

John Grant, senior analyst at aviation-data group OAG, said on March 17 that carriers need to maximize summer sales while they can in order to boost cash flows, and won’t worry too much about whether customers can ultimately take those trips.

“Airlines don’t need to fly to have liquidity, they just need people to book,” he said. “They are putting that capacity out there because it creates revenue. If they have to refund it later, so be it.”

Airport Slots

Carriers have found other ways to raise cash, with British Airways owner IAG SA using its coveted airport slots at London Heathrow to secure a $1.8 billion revolving credit facility this week. Earlier in the month, British billionaire Richard Branson provided the bulk of a 160 million-pound ($219 million) loan to his Virgin Atlantic Airways Ltd.

Ryanair, which raised 1.25 billion euros ($1.5 billion) in debt and equity in September, said it has the cash to ride out the summer without raising more.

Despite the uncertainty, some new airlines have been able to attract investors. Startup carrier Norse Atlantic Airways began a 1.28 billion-krone ($150 million) private placement on Wednesday to bankroll the launch of trans-Atlantic flights. That came weeks after Norwegian short-haul startup Flyr AS raised 600 million kroner.

O’Leary said that while long-haul travel will take some time to return, people will look for a way to book a holiday closer to home. The CEO brushed aside concerns about a fresh wave of Covid-19 cases, arguing that many more people in Europe will be vaccinated by summer. He said those who are inoculated have little risk of symptoms severe enough to land them in hospitals.

“Once you’ve eliminated that risk with the vaccinations, frankly I think people are going to rebel,” O’Leary said in a Bloomberg TV interview. “They’re not going to be willing to be locked up.”

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