By Scott Wright

RYANAIR has reported a loss of more than €800 million after enduring the “most challenging” period in its 35-year history, as coronavirus restrictions grounded a huge proportion of European air traffic.

But the Dublin-based airline raised hopes it could break even this year as European air travel reopens and the market recovers, boosted by the roll-out of vaccines, though it conceded full-year traffic would likely to be at the lower end of recently issued guidance.

A dramatic fall in passenger numbers, which tumbled by 81 per cent to 27.5 million, led Ryanair to post a loss of €815m (£701m) in the year to March 31.

Having made a profit of more than €1bn the year before, it was the biggest reverse in the airline’s history, and attributed wholly to the fall-out from the pandemic.

Revenue dropped sharply, plunging by 81% to €8.49bn, as the partial reopening of routes last summer was followed by further lockdowns and a tightening of travel restrictions as European nations were hit by second and third waves of the virus.

Chief executive Michael O’Leary said the encouraging progress of vaccination programmes across Europe could see a removal of many travel restrictions in time for the key year months between July and September. He declared: “We expect to see our traffic recover strongly into that period.”

However, in a recorded message for investors on the Ryanair website, he said the outlook was still uncertain. “The next year, ending March 2022, will be challenging,” Mr O’Leary said. “There is considerable uncertainty about the rate and timing of the post-Covid recovery.

“We are somewhat optimistic. We think, if Europe vaccinates most of its adult population and certainly all of its high risk groups by the end of June, then there will be increasingly very little justification for the type of travel restrictions, home quarantine or hotel quarantine that we have seen over the year.”

The airline said yesterday that it had seen bookings jump “significantly” since the first week of April, but observed that this compared with a low base last year. Ryanair hopes to carry between five and six million passengers in the quarter to the end of June, before a “significant” recovery in the subsequent three months. Traffic for the year is now expected to be towards the lower end of 80 million to 120 million guidance, though Mr O’Leary held out hope that it could reach the mid-point of that range.

Mulling the outlook for the full-year, Mr O’Leary said the airline was expecting a small loss or breaking even, based on costs already taken out, and subject to yields.

He added: “Obviously, there is huge uncertainty around those forecasts and that guidance. But subject to the vaccination programme continuing to successfully roll-out in Europe, to the removal of most travel restrictions by the end of June, and there being no emergency of any unforeseen variants, then we think those numbers are achievable over the next 12 months.”

Mr O’Leary flagged the prospect of Ryanair taking advantage of the reductions seen in industry capacity during the crisis, following the collapse of EU airlines such as Flybe, Norwegian, Germanwings and Level. He cited Ryanair’s decision to increase its order of Boeing 737 Gamechanger aircraft to 210 from 135 as crucial.

Mr O’Leary said: “A number of flag carriers have announced very significant cuts to their capacity, with the result that I think in a post-Covid world, Europe for the next number of years will be operating at about 75% to 80% of its pre-Covid capacity.

“This is why our Gamechanger order is so important. We will be taking delivery of 50 to 60 aircraft a year, each year, for the next four years. That means that we can offer our airports, and some airports we don’t presently operate at, not just traffic recovery, but growth into the medium term.”

He added that Ryanair would be adding eight new bases in its current fiscal year, and would continue to look for more growth opportunities amid reduced capacity at other airlines.

The company stated that the bail-outs given to airlines such as Alitalia, AirFrance/ KLM, Luthansa and SASwould “distort EU competition and prop up high cost, inefficient, flag carriers for many years.” It has been seeking to challenge some of those bailouts in the courts.

Richard Flood, investment manager at Brewin Dolphin, said: “Ryanair remains amongst the best-placed airlines to benefit from the reopening of the travel market, with its mix of leisure and short haul European destinations. The company’s strong share price continues to show optimism about a return to normal travel; but, whilst Ryanair is cleared for take-off, the journey ahead remains clouded in uncertainty.”

Shares closed down 2.4% at €16.45.