With the coronavirus pandemic crippling air-travel demand, European low-cost carrier Ryanair Holdings RYAAY reported a 48% year-over-year decline in March traffic to 5.7 million guests. Additionally, in view of the widespread travel restrictions in place due to the outbreak, Ryanair’s traffic for fiscal 2020 (ended Mar 31, 2020) improved a mere 4% year over year to 149 million. Notably, the carrier was on track to achieve traffic of 154 million even as late as in early March.
As a result of this adversity, Ryanair expects fiscal 2020 Profit After Tax in the €950 million-€1,000 million range (which is at the lower end of the earlier expected range). The company will release its fiscal 2020 results on May 18. The carrier expects to record an exceptional charge of €300 million in its fiscal 2020 results.
With flights mainly operating for rescue and medical purposes, Ryanair currently runs less than 20 flights per day, representing a massive 99% reduction from the 2,500 plus flights that took to the skies daily prior to the COVID-19 outbreak.
With the situation showing no signs of subsiding, Ryanair anticipates its fleet to remain mostly grounded through at least April and May. With revenues being severely hit, Ryanair undertook several cost-cutting measures to drive its bottom line. The same includes deferring capital expenditures, freezing recruitment, trimming pay for April and May by half and pushing back discretionary spending. Also, this Zacks Rank #3 (Hold) carrier suspended share buybacks. Due to the coronavirus-led crisis, shares of Ryanair have dropped 29.7% in the past month.
The coronavirus outbreak has not only affected Ryanair’s operations but also other airlines across the globe. With demand collapsing exponentially, carriers are trimming their capacity levels drastically. Evidently, the Chicago-based United Airlines UAL slashed its April capacity by 60% with further cuts anticipated in May and June.
Notably, the chaos brought about by this pandemic hit other corners of the Zacks Transportation sector as well. Recently, major railroad operators, namely Union Pacific Corporation UNP and Norfolk Southern Corporation NSC warned that the pandemic could have a material adverse impact on their results.
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Union Pacific Corporation (UNP): Free Stock Analysis Report
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