Ryanair chief Michael O’Leary declined to share any guidance on ancillary revenue income during an investors and analysts call today (27 July) amid gruelling uncertainty caused by the coronavirus (Covid-19) pandemic.

The low-cost airline revealed it shed €770.5 million/$867.1 million (-97%) in ancillary revenue income for the first three months ending 30 June compared to the same period last year.

O’Leary acknowledged the impact on inflight sales for the period in question and stated it was too early to provide further information, but maintained that Ryanair possesses the tools to incentive spending on services that include reserved seating, priority boarding, car hire and inflight retail, food and beverage sales.

“If anything, there is a higher inclination for people to select their seats and bring on carry-on bags,” he told the financial community. “We would be actively encouraging carry-on baggage for health reasons as opposed to check-in bags, despite the fact we make more money from check-in bags.”

‘FLEXIBLE LOW-COST SURVIVOR’

He added that ancillary revenue would likely be volatile until there is some reasonable expectation that a Covid-19 vaccine will emerge in the coming calendar year.

Ryanair Holdings PLC reported a Q1 profit after tax loss of €185 million to total €243m/$273m. Traffic sunk by 99% to 500,000 passengers, with Covid-19 grounding 99% of its fleet. Group Revenue fell by 95% to €125m, despite the airline slashing costs by 85%.

As reported, 40% of flights resumed in July after the Group’s fleet was grounded for nearly four months (mid-march – June-end) on account of EU flight or travel bans and lockdowns.

The airline expects around 60% of scheduled services to recommence in August and for this to rise to (hopefully) 70% in September. It says it services to Spain are continuing as normal after the UK government imposed swift quarantine rules on arrival passengers from Spain over the weekend in view of a spike in virus cases.

The airline has been dealing with a backlog of customer refunds and expects that more than 90% of these will be processed by the end of July.

As of 30 June, the airline’s balance sheet totals €30.9bn in cash reserves, having acted swiftly to curb costs, cancel share buybacks and defer all non-essential capex to protect liquidity.

“We have an extraordinary ability to manage costs and cashflows despite the fact that we are spending a lot of money on pax refunds,” O’Leary told analysts. “We can manage these challenges; we are doing extraordinary work on the cost base.

“The Covid crisis will pass – we will be one of the survivors and one of the most flexible low cost survivors to come out of it. The recovery in volume terms will be rapid and dramatic as it will be stimulated by lower prices. How long it will be until prices will recover is anyone’s guess.”

On Brexit, the airline remains hopeful that the UK will strike a trade deal with Europe for air travel to facilitate free movement of travel and a deregulated airline market between the UK and Ireland.

While not being a UK-registered carrier, Ryanair expects adverse trading conditions to arise and says it has put necessary measures in place to ensure the Group remains majority EU-owned.

It would not provide any profit after tax guidance for FY21, but states it expects to handle around 60 million passengers and record a dampened loss in Q2 reflecting the aformentioned return to flying from 1 July.