Ryanair Q1 2020 earnings

Ryanair posted a net loss of 185 million euros ($216.4 million) for the first quarter of its fiscal 2021 year, slightly better than market expectations.

Analysts polled by Refinitiv were expecting a net loss of 205 million euros for the quarter ending June 30.

The low-cost airline said Monday that its next fiscal 12 months “will be a very challenging year.” “It is impossible to predict how long the Covid-19 pandemic will persist, and a second wave of Covid-19 cases across Europe in late autumn (when the annual flu season commences) is our biggest fear right now,” Ryanair said in a statement.

The sector has been significantly hit by the pandemic with Ryanair’s entire fleet coming to a halt for about four months as countries imposed strict lockdown measures to contain the spread of the virus. Since then, economies in Europe have reopened and airlines have returned to the skies, however social-distancing measures and quarantine policies have limited some operations.

The Irish firm said that it expects traffic to drop by 60{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in 2020/2021, but the uncertainty around the pandemic doesn’t allow it to provide further guidance for the year.

The U.K. government surprised many tourists over the weekend, by announcing that Spain would be removed from the list of countries exempted from quarantine upon arrival back in England.  A growing number of cases in certain Spanish regions triggered the decision.

However, Ryanair said is was not planning to cut flights to Spain from the U.K. The firm’s chief financial officer, Neil Sorahan, told Reuters that the government’s decision was ‘”regrettable” and that “we need to be flexible enough to deal with (localized outbreaks) as they arise over the next number of weeks and months.”

Ryanair said it expects to come out of the economic crisis ahead of competitors due to a “much lower cost base.”

The airline has also said that during its first quarter, it cut costs by 85{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}, which included negotiating pay cuts with staff. Ryanair is also worried about EU and U.K. negotiators not reaching a Brexit trade agreement by the end of the year.

“The challenge of Brexit, and in particular a no-deal Brexit, remains high. We hope, before the end of the Transition Period in December, that the UK and Europe will agree a trade deal for air travel which will allow the free movement of people and the deregulated airline market between the UK and Ireland to continue,” Ryanair said.