Michael O'Leary, chief executive officer of Ryanair Holdings Plc, pauses during a Bloomberg Television interview following a news conference in London, U.K., on Wednesday, Sept. 12, 2018. O'Leary told the news conference that he won't "roll over" in the face of unreasonable demands, while pledging to work to avoid walkouts wherever possible. Photographer: Chris Ratcliffe/Bloomberg
© Bloomberg

Ryanair chief executive Michael O’Leary said that he and the rest of the airline’s employees will take a 50 per cent pay cut, as Europe’s largest low-cost carrier prepares for a lengthy shutdown in the region’s air travel.

The outspoken executive said Ryanair was working on a best-case scenario of two-three months in which flights would be grounded and revenues would vanish as the coronavirus outbreak wreaks havoc on the industry.

However, in an interview with the Financial Times he admitted that “honestly none of us have any idea”. 

“All that you can draw on is what appears to be the Chinese experience. Both for hope and optimism. They seem to have no new cases now in the last two days, that’s three months later but after very draconian lock down measures,” he said. “If we follow the same pattern as the Chinese then I think certainly from our perspective . . . we’re talking about a close down that will last for at least three months.” 

The airline industry has been at the sharp end of the economic disruption unleashed by the virus, with many major carriers lobbying their governments for financial support and a series of top executives taking pay cuts alongside their staff.

Willie Walsh, the chief executive of BA’s owner IAG, this week took a 20 per cent pay reduction for the remainder of his contract after delaying his retirement.

Mr O’Leary said he was waiting for details from the UK and Irish governments on programmes that might help pay workers, which are expected to be announced later on Friday. Ryanair is accessing those schemes that have already been put in place across many continental European countries. 

“We are facing a situation whereby . . . airlines and airports are going to have no customers and no revenues for the next two or three months. What we’re clearly trying to avoid — if at all possible because we have to preserve cash — we want to avoid mass lay-offs but the only way we can avoid mass lay-offs in our industry . . . is going to be payroll support for the next two to four months,” said Mr O’Leary. 

The pay cut would be for the months of April and May. Mr O’Leary said at the end of May the group will have to reassess the situation. He added that he could not rule out job cuts further down the line.

Ryanair had cash and cash equivalents of over €4bn as of March 12. In addition, the group has undrawn credit lines and nearly 300 aircraft that it owns with a current value of about $8-$10bn, Mr O’Leary said. He did not expect the airline to have to draw on the credit lines for the moment.

Earlier this week, the global airline industry said it would need up to $200bn in emergency support as the international travel industry continued to bleed cash. The International Air Transport Association, the airlines’ main trade body, said the majority of carriers faced running out of money within two months. 

But Mr O’Leary warned that the EU had to be careful over how it offers airlines state aid, saying that governments had to be careful not to create “massive distortion” with bailouts that will leave “well-run airlines at the mercy of nationalised airlines at the end of this process”. 

Mr O’Leary said: “The priority here for us as a company is how do we preserve as much cash so that if we have to operate for three, six, nine, maybe even 12 months, with no flights and no revenues how do we survive that, do we have the cash to survive that and we believe we do.”

Get alerts on Ryanair Holdings PLC when a new story is published

Copyright The Financial Times Limited 2022. All rights reserved.
Reuse this content (opens in new window) CommentsJump to comments section

Follow the topics in this article