Ryanair sees travel rebound threatened by European lockdowns

London

RYANAIR chief executive officer Michael O'Leary said steps aimed at containing spiralling coronavirus infection rates in Europe are putting the region's travel rebound at risk.

Measures, including a return to lockdown conditions in Austria, mean airlines face a "fraught" period through Christmas as they wait to see whether a resurgence in demand will be strangled off, O'Leary said on Nov 23 in a webinar broadcast by Eurocontrol, criticising the curbs as illogical.

Bookings for vacations next summer could also be affected, and there is a possibility that the US will review the reopening of its borders, he said in the most downbeat take on prospects from an airline chief since lockdown worries began to weigh on airline stocks on Nov 19.

"It's inevitable that we will undermine confidence between now and Christmas, and that will disrupt Christmas and it will also unsettle people between Christmas and New Year, when they normally start booking their summer holidays," he said, adding that until last week "things were going great".

Europe has quickly become the global epicentre of the Covid-19 outbreak, prompting governments to resort to a fresh round of clampdowns. German Chancellor Angela Merkel said on Nov 22 that the latest surge in infections is the worst of the pandemic and called on federal states to tighten restrictions - just days after Austria announced a fourth lockdown.

The measures have triggered unrest in countries including the Netherlands, where police fired warning shots and deployed a water cannon to contain protests.

The deterioration comes with the aviation industry only just beginning to recover after the virus grounded flights for months, leading carriers to slash jobs, retire fleets and load up with debt just to survive.

Subsequent travel restrictions made for a sluggish resumption of demand on international routes, with European operators enjoying only a short period of strong bookings in the second part of the summer and during October's school holidays.

O'Leary said governments are panicking and that new restrictions should apply only to the unvaccinated, with the principle of free movement within the European Union upheld by member states.

"I think now we're going to unsettle people, we're going to undermine confidence, despite the high levels of vaccination across Europe," he said.

The CEO said there is a chance that a rebound in North Atlantic travel could go backwards if events in Europe prompt a "jumpy" Biden administration to reconsider a reopening of US borders that took effect on Nov 8. Ryanair's own business would not be impacted by such a development since it operates only short-haul flights.

O'Leary's view contrasts with that of Virgin Atlantic Airways counterpart Shai Weiss, who said on Nov 22 he does not personally expect a tightening of the US or UK borders, since the Covid flare-up in mainland Europe stems mainly from the slow take-up of booster shots rather than a new viral threat.

"Cases are no longer the determining factor," Weiss said.

"It's really about variants of concern that are new and dominant beyond the Delta variant, and we haven't see one."

He said Virgin is set for a bumper Thanksgiving and Christmas but cannot predict how strong demand will be next summer, with most bookings coming no more than a few of months in advance of flying.

Ryanair earlier revealed next summer's timetable plans for the UK, its biggest market, including 24 new routes for a total of more than 500. That is up from 489 in the 2020 schedule, before the pandemic shattered operations.

O'Leary said the Dublin-based company aims to restore cuts to crew pay over the next 2 or 3 years, provided passenger numbers continue to recover.

Discount rival EasyJet said separately on Nov 23 it will recruit 1,500 seasonal cabin crew for next summer, with 11,000 applications already received.

The UK firm said it has sufficient pilots for the period but will look to take on 150 cadets early next year and begin recruitment of experienced Europe-based aviators for its Airbusfleet in coming weeks. BLOOMBERG