Irish airline Ryanair announced mass job cuts on May Day and salary caps for remaining employees, as the low-cost flyer made a U-turn on its bullish insistence on being able to ride out the virus outbreak unscathed.
The ‘no-frills’ carrier will jettison 3,000 jobs – about 15% of its workforce – and plans to reduce the wages of its remaining workforce by 20%. The job cuts will include pilots and cabin crew.
CEO Michael O’Leary had previously played up his company’s ability to weather the pandemic’s devastating impact on air travel demand – down more than 90% in Europe – by highlighting Ryanair’s €4 billion in cash reserves.
“Aviation workers are now facing a tsunami of job losses,” Brian Strutton, general secretary of the British Airline Pilots’ Association, said in a statement. “Ryanair seems to have done a U-turn on its ability to weather the COVID storm.”
The airline’s schedule for 2020 has been torn apart by the virus and flights will remain grounded until at least July. Regular passenger numbers will not return to previous levels until summer 2022, Ryanair predicts.
The carrier will also stop operating “at a number of aircraft bases across Europe” until demand picks up again and is expecting losses of €100m for April and May.
An order of Boeing MAX aircraft might also be in jeopardy, although O’Leary insists that “we would still like to take some if not all of those aircraft” as part of a renewed and resized fleet for the next decade of operations.
The Irishman also suggested that the price per plane could be renegotiated. But the controversial aircraft – which was involved in two fatal crashes – is yet to secure recertification for a return to service.
Boeing has made major changes to the plane in order to correct the problems that led to the tragic incidents, so US and European regulators have to give the plane the green light.
But the European Aviation Safety Agency (EASA) told EURACTIV that although “work is progressing despite the lockdown” there is no firm timetable in place for test flights.
EASA has in the past relied on the findings of its US-equivalent, the FAA, but given the delicate nature of the MAX case and the controversy surrounding its initial approval, the EU regulator has insisted on conducting its own in-depth inquest.
Enemy of the state aid
Despite Ryanair’s increasingly precarious-looking situation, O’Leary continues to rail against governments that are bailing out his competitors and has even threatened legal action if the EU approves state aid applications.
“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,” the Irishman told Bloomberg TV.
“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.”
Air France-KLM is set to get more than €10 billion from the French and Dutch governments, Alitalia is in the process of being nationalised by the Italian government and Lufthansa is still locked in talks with Berlin about a reported €9bn bailout.
The latest airlines to get a public money pledge are Ryanair-rivals Vueling and Iberia – subsidiaries of British Airways parent company IAG – which will get a combined loan of €1bn from the Spanish government.
It means that European governments have so far allocated nearly €30bn in aid for the struggling industry, with more set to come.
[Edited by Benjamin Fox]