London The corona crisis hit the aviation industry particularly hard: For many weeks, the machines of many companies have been standing on the ground unused. But Ryanair will “probably survive significantly longer than any other airline,” says Ryanair boss Michael O’Leary in an interview with the Handelsblatt.
“We went into this crisis with almost four billion euros in cash on our balance sheet. Even if we don’t have any sales by the end of the year, we still have enough money, especially after support measures such as short-time benefits have been introduced in most EU countries. ”
At the same time, he expects that there are a number of other airlines that will not survive until then. He rules out Ryanair’s use of government aid – and criticizes rival companies such as Lufthansawho do that. “I think airlines like Lufthansa and Air France are using the Covid crisis to enrich themselves with incredibly high sums from the state.”
According to the manager, air traffic will not resume before June. “But life for the airline industry should not become really normal before summer 2021.”
At the same time, O’Leary does not expect the cheap tickets to end: “If we are allowed to fly again, all airlines will be under pressure to fill their planes”. However, he doesn’t have any good news for his employees: at Ryanair, up to 20 percent of jobs will be cut in winter.
Read the full interview here:
Ryanair typically completes 2500 flights a day across Europe. Because of the corona crisis, there are less than 20, and have been for a few weeks. How long can Ryanair survive?
Probably significantly longer than any other airline. We went into this crisis with almost four billion euros in cash on our balance sheet. Even if we don’t have sales by the end of the year, we still have enough money, especially after support measures such as short-time work benefits have been introduced in most EU countries. However, I would expect that there are a number of other airlines that will not survive until then.
Experts speak of an existential crisis for the industry, and some airlines have called for government aid. How do you feel about it?
We are not asking for government aid. And we don’t think any airline should get government support.
I beg your pardon?
It is important that any support is transparent and accessible to all airlines. The system of short-time work benefits, where salaries are paid, is a good measure. And it doesn’t quite make sense to me why an airline still needs state aid if it can use short-time work. The fleets of all airlines have been shut down. And if the state then pays the employees’ wages, what else do you need government aid for?
The case of Lufthansa in particular is remarkable: it wants state aid in Germany, Belgium, Switzerland and Austria, for companies that have a German owner. Austria is currently debating whether the Austrian taxpayer should support the daughter of a German company.
And, should he?
No! The planes are on the ground, salaries are paid, there are no airport fees, no fuel costs, no maintenance – what do you need government support for?
So wouldn’t Ryanair want support for (the Austrian subsidiary) Lauda?
We rule that out.
Short-time work applies to Ryanair employees and they have to forego salary. What about you?
The management waives 50 percent of the salary in April and May and as long as the crisis continues – even if we of course work full-time. If there are no flights, there is no work and you are not paid. We have to set a positive example, after all we cannot expect everyone to suffer without us doing it ourselves.
“Nobody will lose their money”
Some customers have complained on social networks that they do not get their money back for canceled flights, but are only offered vouchers.
One must not forget what situation we are in at the moment. In a normal month, we would perhaps refund 5,000 to 10,000 tickets, and we have enough staff to handle such requests. But the number of inquiries has increased by 1,000 percent – and our employees who are responsible for processing refunds are based in the home office.
We sincerely apologize to anyone who is annoyed with the delay. But it will still take weeks and months, even if the situation has returned to normal, until all inquiries have been processed. And issuing vouchers is faster, that’s why we offer it. But nobody will lose their money.
Another topic: In Germany, a new owner is looking for Condor. You haven’t been interested so far – has that changed?
No. In the current environment, no airline can make a takeover. I suspect that Condor will qualify for substantial government aid from Germany because Lufthansa will also receive substantial aid, in addition to the aid for salaries. Why if you get short-time work benefits at the same time? I think airlines like Lufthansa and Air France are using the Covid crisis to enrich themselves with incredibly high sums from the state. Check out IAG (the parent company of British Airways and Iberia, editor’s note), they do not request state aid. When an airline is not viable, when salary costs are borne and there are no other costs such as airport fees, something very basic is wrong with the business plan. This also applies to Virgin Atlantic.
Because Richard Branson, the founder of Virgin Atlantic, had publicly asked for government aid? After all, he had offered his Caribbean island as security.
Oh yes, great. But why not its stake in other companies? And why didn’t he offer to move back to the UK and pay taxes here?
I see what you’re getting at. When do you expect the industry to return to normal?
It will be some time before normality returns. We expect most EU countries to announce and relax their travel restrictions towards the end of April, by the end of May. Air traffic is expected to restart a month later. But life for the airline industry should not really become normal before summer 2021.
“It is not feasible for people to keep their distance”
Various models are discussed for the first time after the strict restrictions have been lifted. Do you think it makes sense that travel is initially only allowed in Germany?
No. That has to be done at European level. You can not only offer flights in Germany, or only in Spain or France, but not between Germany and Poland or Spain and Portugal.
What would be sensible steps in your opinion?
One would have to control the temperature of passengers, as is done in Asia. Face masks would have to be worn in the terminals and planes, both by the crew and the passengers. The idea that people keep a sufficient distance cannot be implemented.
What do you think of the suggestion that the center seat should be left free?
This is complete nonsense. This is not very effective, after all, the distance between the seat by the window and the aisle is too small, as well as to the front and rear rows. And how should the distance on the way to the seat be maintained? In the terminal and on the bus? Checking the temperature and wearing face masks makes more sense.
Do you expect people to want to fly again after lifting the restrictions?
There will be demand in June, July and August, especially from travelers visiting their friends and family. But tourists will also fly because that is the only time they can go on vacation before winter. However, the load factor will be lower, and so will the ticket prices.
Are the ticket prices cheaper?
If we can fly again, all airlines will be under pressure to fill their planes. Hotels will also try to lure tourists with cheap offers before school starts again. After all, this is their only vacation season this year. All airlines will do special promotions. And I wouldn’t be surprised if the demand rises sharply. Many people have been locked up for the past two or three months.
What is the perspective for your employees? Will there be layoffs at Ryanair?
I think it is inevitable that jobs will be deleted. Traffic in the winter timetable is likely to be 20 to 30 percent lower. We will use fewer planes and fewer flights. We will need fewer staff there.
To what extent?
I think 10 to 20 percent job cuts in winter is almost inevitable. The passengers will come back. But that will take time. We are currently experiencing an unprecedented pandemic. And who knows if there won’t be another wave. Some airlines will not survive. But those who do will have better growth opportunities than before.
More: State money is of no real help to aviation