Ryanair reports a 13% increase in annual profit after tax but slashes traffic target for fiscal 2021

In its report on Monday, Ryanair (LON: RYA) said that its annual profit after tax came in 13% higher in fiscal 2020. The company also slashed its target for annual passenger traffic by another 20% and expressed plans of withdrawing from some of the European airports.

The low-cost carrier estimated that it will fly less than 80 million passengers in fiscal 2021. Last week, Ryanair had given an estimate of 100 million passengers that was already massively cut from its original target of flying 154 million passengers in the current financial year.

According to Chief Executive Officer, Michael O’Leary, at this stage, these figures can only be thought of as guesswork.

Ryanair reports £890 million in profit after tax

In the year that ended on 31^st March, Ryanair reported £890 million in profit after tax. Following the release of the annual financial report, the Irish airline opened roughly 4% up in the stock market on Monday at £7.88 per share.

On the revenue front, the company said that it generated £7.58 billion in fiscal 2020 as compared to £6.88 billion last year. As the ongoing health crisis pushed Ryanair’s fleet into grounding, Europe’s largest airline in terms of passenger numbers saw an around £315 million exceptional charge ascribed to fuel and currency hedges.

Ryanair boasted £3.66 billion in cash on Monday and announced its weekly cash burn to have been reduced to around £54 million in May. Its cash burn was reported roughly at £178 million in March.

O’Leary further highlighted that the airline will first consider pulling out of Germany, Spain, and the UK-based airports that are currently making losses. If necessary, it may also evaluate its performance in Belgium, Italy, and the rest of the eastern and central Europe at a later stage.

As per the CEO, the company’s subsidiary in Austria, Laudamotion, has taken an unparalleled hit due to the Coronavirus pandemic that may also result in its withdrawal from its main operating base in Vienna.

Ryanair to layoff more than 3000 employees

In a bid to shore up finances, Ryanair has also launched a huge cost-cutting drive that includes laying off roughly 250 employees at its head office and around 3,000 cabin crew and pilots combined.

In the quarter that ends in June, the company now anticipates a £179 million loss. In the quarter after that, Ryanair estimates a significant contraction in its loss to the point of breaking even.

O’Leary hinted that the company will use sharp discounts to quickly recover demand after COVID-19. Tickets, he added, are unlikely to be priced at the pre-crisis rates until 2022.