After the Omicron variation of COVID-19 struck air travel demand in early 2022, Ryanair says it will need to continue offering discounted ticket prices to entice people to go.
Following government-imposed Omicron-related traffic limitations, Europe’s largest airline by passenger numbers reduced its planned January schedule by one-third.
The Irish low-cost carrier said the variant “badly harmed” bookings, load factors, and yields (money generated per ticket and mile flown) in December and January in its third-quarter results announcement on January 31, 2022.
“We saw a collapse in close-in bookings, and weaker yields,” group chief executive Michael O’Leary said in a video statement. He said the impact on yields was also continuing into February and that pricing would remain “very sensitive” to news flow on the virus.
“We can see traffic recovering in February and March but remain nervous about what the yield is. We will spend money to fill our planes in the near term,” O’Leary added.
Eurocontrol, the European network manager, said network traffic fell to 69 percent of 2019 levels in the first 26 days of January, a significant decline from November and December 2021, when it was operating at 77-78 percent of pre-crisis levels.
Ryanair is being cautious for its 2022 financial year, which runs until March 31, 2022, due to the impact of Omicron. It recorded a net loss of €96 million ($107 million) in the third quarter of 2021.
It estimates a deficit of between €250 million and €450 million ($279-$503 million) for the full financial year, a higher range than normal for this time of year due to the uncertainty caused by COVID-19.
Coming towards the end of the month & the impact of #Omicron is all too clear, with traffic (1-24 Jan) 30% down on 2019, near the low scenario of our forecast. Anticipate this will be short-lived.@Transport_EU @ECACceac @IATA @A4Europe @eraaorg @EBAAorg @ACI_EUROPE @CANSOEurope pic.twitter.com/2dDkb85vVK
— Eamonn Brennan (@eurocontrolDG) January 25, 2022
“Omicron was a very unwelcome development and we would caution there will be other variants and challenges arising out of COVID-19 that we will have to address,” O’Leary said. “Being cautious is the most sensible way going forward.”
Nonetheless, it, like its European budget rivals easyJet and Wizzair, is anticipating a strong summer in terms of bookings, albeit earnings will take longer to recover.
Ryanair stated that its capacity for summer 2022 will be 115 percent of that of summer 2019.
“We expect a strong bounce back in summer 2022, albeit maybe at lower yields, as people who have been locked up for the last two years return to traveling and going on holidays,” O’Leary said.
