
Bloomberg
Ryanair Holdings Plc will cut 3,000 jobs and said it will challenge some 30 billion euros ($33 billion) in state aid being doled out to keep its European competitors afloat during the coronavirus pandemic.
The Irish discount carrier added to a mounting employment toll that includes 12,000 cuts at British Airways and 5,000 at SAS AB. The reductions represent about 15% of Ryanair’s workforce, and would include pilots and cabin crew.
The remaining staff will take a 20% pay cut, Chief Executive Officer Michael O’Leary said in an interview with Bloomberg TV. O’Leary expects demand to bounce back slowly, while warning that government bailouts of airlines will spur ticket discounts, worsening the effects of weak demand on pricing and industry profit.
“The people who went in weakest, which is the legacy airlines, Air France, Alitalia, Lufthansa, have either been nationalised or are receiving extraordinary volumes of state aid,†O’Leary said. “These are going to hugely distort the level playing field for aviation in Europe for three to five years. What we’re facing now is a historic decline in air traffic in Europe for the next 12-18 months.â€
Ryanair said in a statement that it will carry less than 1% of its normal passenger volume in its fiscal first quarter and doesn’t expect a full recovery until summer 2022 at the earliest.
O’Leary has consistently railed against bailouts, saying that they are in breach of European Union competition and state aid rules, and said the carrier will challenge them in court. Carriers across the region are asking for help to survive the coronavirus crisis that has grounded much of Europe’s air traffic, endangering not only the airlines but connections that keep tourists flowing to Rome and Paris and help power Germany’s export economy.
British Airways sister airlines Iberia and Vueling said they reached agreements for a
combined $1.1 billion in Spanish government-backed loans. Lufthansa, Germany’s flagship carrier, remains locked in negotiations over a mutibillion-euro package of assistance. In the UK, billionaire Richard Branson is seeking additional investors in a bid to gain access to state-backed loans. The French and Dutch governments extended a lifeline to Air-France-KLM valued at as much as 11 billion euros.
The fight over who eventually gets access to state aid will expose the creeping protectionism in Europe, where most if not all carriers were at some point state owned, enmeshed in a sense of national pride when air travel was still a novel and exciting concept. The question becomes whether national governments will come to the rescue of their favourite carriers, especially when many of them were already struggling with overcapacity and cut-throat competition.
Much of the future of the aviation industry will depend on when there will be a common international standard for resumption of flights, according to Heathrow Airport CEO John Holland-Kaye. “If we can’t agree that and we require social distancing until a vaccine or cure comes in — it’s 12 to 18 months in time — then I think many airlines and airports will have gone bankrupt in that time or will be nationalised.â€