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整个航空业里,只有这家航空公司还在扩张

整个航空业里,只有这家航空公司还在扩张

Shawn Tully 2020年08月06日
这个现象在这种老旧行业中实属罕见。

受新冠疫情影响,欧洲航空公司纷纷祭出专注于缩减未来数年航班班次的生存策略。在这场波及全行业的缩减浪潮中,它们取消了飞机订单,减少了班次,并开始压缩在伦敦、罗马等机场的停机位。

这便是瑞安航空公司(Ryanair)首席执行官迈克尔·奥莱利在宣布截至6月份季度(2021财年第一季度)业绩的视频中所推出的航班计划,随后奥莱利又于7月27日召开了分析师会议。在荧屏上,以直言不讳著称的奥莱利树立了年报电话会议休闲范的新标准。他身穿宽松的格子花纹衬衫,到腰间的扣子只扣了一半,双眼则越过那副搁在靠近鼻尖位置的金属边框眼镜打量着他人。奥莱利的介绍基本分为两个部分:首先,他讲述了瑞安航空为尽可能地降低疫情带来的大规模影响而采取的强硬举措,这些措施令人惊讶地将公司的现金支出降为零;其次,他介绍了公司的发展蓝图,也就是让瑞安这家欧洲客运量最大的航空公司大幅扩张——按照《财富》杂志的估计,公司在5年后的规模将比其疫情前增长三分之一。

奥莱利称,瑞安的所有航班从3月中旬到6月底基本处于停飞的状态,其该季度的客运量从此前的4200万降至仅仅50万。营收则暴跌了99%,从22亿欧元降至1.28亿欧元(约合1.68亿美元)。在业绩暴跌期间,为了保留现金,奥莱利大力削减成本。公司的总支出下降了85%,从略高于20亿欧元的水平降至3.13亿欧元(从26.2亿美元降至4.1亿美元)。得益于这种狂砍,瑞安航空该季度的亏损仅有1.85亿欧元。对比疫情前的销售水平,这个数字在同规模航空公司(2020财年营收:85亿欧元,约合110亿美元)或更大型航空公司当中都属于最低水平。

但这一举措的主要目的并不只是为了减少下一个季度的亏损,而是作为未来宏伟策略的核心构件:将支出基础降至可打造可持续竞争优势的水平,从而让瑞安的业绩能够在恢复期飙升,而竞争对手依然将哀嚎一片。

尽管他对瑞安在新冠疫情后的蓬勃发展非常乐观,但奥莱利预测运营的正常化进程将异常缓慢,整个行业与瑞安均是如此。他如今预测瑞安7月的客运量将恢复至去年的4成,然后8月增至6成,9月增至7 成,然后至少在2021年3月之前会一直保持这一水平。按照这个恢复轨迹,2021财年的总客运量仅有6000万,较2020财年的1.49亿下滑了60%(今年3月底结束)。这一展望预测自5月以来出现了恶化,当时奥莱利预测2021财年客运量为7500万,而且从10月开始将恢复到正常班次量的80%。

奥莱利警告说,瑞安的客运量非常有可能连下调后的预估数也达不到。他在电话会议上说:“当前我们能给出的最乐观客运量数字是6000万,前提还是第二波新冠疫情不会导致大范围的封锁。”除了提到新增病例数带来的威胁之外,奥莱利还警告说,尽管一些前往他国的路线十分安全,但欧洲政府正在对这类航空旅行强制实施突然、“随意”的限制,而且这些“管理十分糟糕的过度反应”可能会极大地拖累恢复进程。

在电话会议中,这位59岁的首席执行官(自1994年以来便成为了瑞安的掌门人)批评了英国当局对所有从西班牙前往英国的乘客实行14天隔离的要求,并称此举取缔了两国之间的交通往来。他说:“英国政府对于加泰罗尼亚的疫情感到恐慌”,但“他们应该控制的是加泰罗尼亚的乘客,而不是在毫无科学依据的情况下将整个西班牙作为防控目标。”他还抨击了爱尔兰政府,因为该国要求从英国入境的乘客进行14天的隔离,而有15个国家的乘客则被列入了没有任何限制的“绿名单”。他提到,以色列和摩洛哥也在仓促之间实施了强制禁令或限制,此举在短时间内让来自欧洲的航班出现了暴跌。对于奥莱利来说,这些国家强制实施的禁令所产生的不确定性与健康风险是不成正比的,也就是说“即便6000万的客运量亦是一个具有挑战性的数字。”

瑞安的竞争力一直在于其强大的成本优势,这一点从2020财年便可见一斑。不计燃油费用,这家爱尔兰航空公司单位乘客的平均运输成本为31欧元(约合41美元)。瑞安称,该数字要比排名第二的匈牙利廉价航空Wizz低26%。作为对比,挪威航空公司和汉莎航空的单位乘客成本分别为87欧元(约合114美元)和101欧元(约合132美元)。这一竞争优势也让瑞安能够在正常时期(每天2400班次,覆盖242个机场,包括阿伯丁至马拉喀什,里斯本到第比利斯等)给出37欧元(约合48.5美元)的平均票价。

这家不提供不必要服务的航空公司去年吸引了1.49亿名乘客,也让瑞安成为了欧洲总客运量最大的承运商,击败了汉莎航空(1.45亿),国际航空,英航与西班牙航空的总和(1.18亿)、易捷航空(9600万)以及法航荷航集团(8800万)。在营收方面,瑞安去年斩获了85亿欧元,排名第五,但其11.3亿欧元(约合14.8亿美元)的运营利润相当于汉莎的三分之二,IAG的43%,然而,瑞安的销售额不到汉莎的四分之一,以及IAG的三分之一。瑞安的利润率也是一马当先,其2020财年的利润率为13.3%,几乎是汉莎的三倍,比国际航空高出30%。

着眼于疫情之后的策略

奥莱利对于预测可谓是乐此不疲,瑞安之所以能在客运量和利润率领域独占鳌头,其超低成本功不可没,而在疫情后同行撤退的同时进行扩张将进一步拉低支出成本。这一策略基于奥莱利对行业疫情后发展趋势的判断。他认为欧洲航空公司已经开始制定将持续数年的缩减计划,而且这种大规模的收缩举措将继续实施。多家航空公司已经撤出了航空领域,包括服务于英国和法国区域机场Flybe,汉莎旗下的廉价航空德国之翼,国际航空旗下廉价航空Level of Austria,以及为地中海旅游胜地提供服务的SunExpress德国业务,它是由汉莎和土耳其航空成立的合资企业。

这些大型航空公司也在削减运力。法航荷航集团在2021年将砍掉五分之一的航班,意大利航空则砍掉了短途路线,以专注于远距离目的地。在电话会议中,奥莱利抨击了法国和德国向法航和汉莎发放的110亿欧元(约合129亿美元)国家援助,他称这些补贴是“非法的”而且会助长“不公平竞争”。与此同时,包括易捷航空和挪威航空在内的竞争对手都在推迟或取消新飞机的订单,继而有可能会对空运反弹后的载客能力造成限制。由于大多数航空公司都削减了其运营规模,越来越多的起飞和降落空位将处于闲置状态。瑞安希望启用众多空出来的空位,从而让公司在此前的机场进行全力扩张。

奥莱利认为,欧洲航空公司能够在危机衰退后创造业务的唯一方式就是提供折扣机票。他说:“我们将看到航空公司为刺激市场将推出大量的折扣票,这是件好事情,因为此举会让那些大量被封锁的人选择空运出行,并提升整个市场。”他说,旗舰级航空公司将能够提供一些超低折扣,因为它们手中有大量的政府补贴。另一方面,为了与之抗衡而被迫推出超低折扣价的独立航空公司则会像Flybes和Levels一样走上破产之路。

为了保住其超低成本航空公司的老大地位,同时提供较低的折扣机票,瑞安航空则需要下调其飞机的支出基础,但这并非是小打小闹式的下调,而是大幅削减。第一季度85%的成本削减主要源于劳动力成本的收缩。由于航班班次接近零,其位于欧洲的1.7万名飞行员和空乘人员大部分都处于休假状态。各国政府则为这些员工提供失业福利。例如在西班牙,政府直接支付雇员损失的薪资。在英国,航空公司雇员的降薪部分由政府补贴。尽管如此,瑞安的员工成本从2019年第一季度的2.72亿欧元(约合3.56亿美元)降至6900万欧元(约合9000万美元),降幅达到了75%。

在劳动力方面,奥莱利设定了两个目标:第一,面对1.7万名雇员团队,公司几乎没有裁员;第二,大幅降低了未来四年的薪资水平。这些举措为瑞安应对未来的折扣价格战奠定了胜利的基础。作为保住工作的交换条件,瑞安成功地将飞行员(到目前为止薪资最高的人群)的平均薪资降低了20%,空乘人员的平均薪资降低了10%。瑞安集团旗下最大子公司的首席执行官艾迪•威尔森说:“我们不会对劳动力成本基础进行一刀切式的削减。飞行员占总成本最高,因此他们的削减幅度也是最大的。”他也表示,整体节省的成本远超10%。威尔森还说:“我们需要将这些人紧紧握在手中,这样,我们便可以在市场反弹之时迅速恢复,并获得市场份额。”

低油价应该算是一个利好消息。奥莱利说:“因为需求的持续疲软,我们将看到供应过剩的情况。我们认为油价在未来2-3年内不会启高,会在40美元左右徘徊。”如果航空旅行在这一期间恢复到2019年的水平,瑞安将节省一半的燃油成本,超过10亿欧元(约合13.1亿美元)。

加倍押注MAX机型

奥莱利策略的一个重要支撑点在于大量获取波音不断推迟发布的737 MAX机型。简而言之,奥莱利希望MAX机队能够在空运市场反弹以及在竞争对手蓄势待发时,为瑞安提供志在必得的额外座位。他说:“瑞安将成为少数能够继续增长的航空公司,我们是为数不多的能在2020、2021和2022年有不少飞机订单的航空公司之一。”瑞安是一家单机种航空公司。其所有的470架飞机都是737s系列机型。这也是为什么瑞安可以像其同行、737拥趸西南航空公司那样,将维护成本控制得如此之低的原因。瑞安有210架MAX机型订单。奥莱利希望波音能够获得美国官方的最终批准,重新在9月份推出MAX机型,同时,他也希望波音在圣诞节之前能够为瑞安交付40架MAX机型。

MAX在重启方面所遭遇的长期磨难并未动摇他对于该机型的信念。奥莱利说:“我们依然是MAX坚定的拥护者。”他表示,MAX机型提供的位置比当前的737s多4%,并节省16%的燃油成本,因此对于降低单位乘客成本来说至关重要。尽管众多航空公司都取消了MAX订单。奥莱利将使用其作为少数买主的地位,向波音争取更大的交易优惠。在210架的订单中,有三分之一都是“待定”订单,意味着瑞安可购买也可放弃。这一地位为瑞安提供了强大的议价优势。

奥莱利还预计,随着竞争对手的撤退,欧洲各大机场将充斥着闲置的停机位。他认为到明年夏季,各大机场将提供大量的租金折扣,以填满闲置机位。他解释说:“那些损失了大量运力的机场会推出优惠举措,从而吸引像瑞安这样的航空公司帮助它们在其他机场缩减规模期间恢复增长。”机场费用是瑞安去年第一季度最大的一笔开支,这项支出的减少将进一步巩固奥莱利的低价策略。

对于奥莱利来说,最乐观的前景莫过于瑞安在2021年夏季回到疫情前水平,也就是每天1.5亿的客运量。但他也预测,整个市场会比去年小很多。因此,如果实际情况就是这样,那么瑞安将获得大量的市场份额。去年,奥莱利设立了在2024年之前实现2亿客运量的目标,也就是高达34%的同比增幅。他如今已经不再定义具体数额了。但根据笔者的估计,所有的因素,包括更低的劳动力成本、MAX机型重新交付,以及机场机位租金的降低都已显现出来,并为瑞安的腾飞奠定了基础。如果瑞安实现了其目标,那么它的市场份额将从当前的15%跃升至约20%,这个现象在这种老旧行业中实属罕见。

在疫情经济期间,最吸引眼球的故事莫过于行业中受到疫情影响的佼佼者通过制定计划,在绝境中东山再起。我们很难想象还有什么航空公司发展计划比奥莱利的这个更具野心——有些人认为该计划荒谬至极,或者比奥莱利的计划更能吸引人的关注。(财富中文网)

文中所有欧元对美元的汇率都是按照当前外汇汇率折算。

译者:Feb

受新冠疫情影响,欧洲航空公司纷纷祭出专注于缩减未来数年航班班次的生存策略。在这场波及全行业的缩减浪潮中,它们取消了飞机订单,减少了班次,并开始压缩在伦敦、罗马等机场的停机位。

这便是瑞安航空公司(Ryanair)首席执行官迈克尔·奥莱利在宣布截至6月份季度(2021财年第一季度)业绩的视频中所推出的航班计划,随后奥莱利又于7月27日召开了分析师会议。在荧屏上,以直言不讳著称的奥莱利树立了年报电话会议休闲范的新标准。他身穿宽松的格子花纹衬衫,到腰间的扣子只扣了一半,双眼则越过那副搁在靠近鼻尖位置的金属边框眼镜打量着他人。奥莱利的介绍基本分为两个部分:首先,他讲述了瑞安航空为尽可能地降低疫情带来的大规模影响而采取的强硬举措,这些措施令人惊讶地将公司的现金支出降为零;其次,他介绍了公司的发展蓝图,也就是让瑞安这家欧洲客运量最大的航空公司大幅扩张——按照《财富》杂志的估计,公司在5年后的规模将比其疫情前增长三分之一。

奥莱利称,瑞安的所有航班从3月中旬到6月底基本处于停飞的状态,其该季度的客运量从此前的4200万降至仅仅50万。营收则暴跌了99%,从22亿欧元降至1.28亿欧元(约合1.68亿美元)。在业绩暴跌期间,为了保留现金,奥莱利大力削减成本。公司的总支出下降了85%,从略高于20亿欧元的水平降至3.13亿欧元(从26.2亿美元降至4.1亿美元)。得益于这种狂砍,瑞安航空该季度的亏损仅有1.85亿欧元。对比疫情前的销售水平,这个数字在同规模航空公司(2020财年营收:85亿欧元,约合110亿美元)或更大型航空公司当中都属于最低水平。

但这一举措的主要目的并不只是为了减少下一个季度的亏损,而是作为未来宏伟策略的核心构件:将支出基础降至可打造可持续竞争优势的水平,从而让瑞安的业绩能够在恢复期飙升,而竞争对手依然将哀嚎一片。

尽管他对瑞安在新冠疫情后的蓬勃发展非常乐观,但奥莱利预测运营的正常化进程将异常缓慢,整个行业与瑞安均是如此。他如今预测瑞安7月的客运量将恢复至去年的4成,然后8月增至6成,9月增至7 成,然后至少在2021年3月之前会一直保持这一水平。按照这个恢复轨迹,2021财年的总客运量仅有6000万,较2020财年的1.49亿下滑了60%(今年3月底结束)。这一展望预测自5月以来出现了恶化,当时奥莱利预测2021财年客运量为7500万,而且从10月开始将恢复到正常班次量的80%。

奥莱利警告说,瑞安的客运量非常有可能连下调后的预估数也达不到。他在电话会议上说:“当前我们能给出的最乐观客运量数字是6000万,前提还是第二波新冠疫情不会导致大范围的封锁。”除了提到新增病例数带来的威胁之外,奥莱利还警告说,尽管一些前往他国的路线十分安全,但欧洲政府正在对这类航空旅行强制实施突然、“随意”的限制,而且这些“管理十分糟糕的过度反应”可能会极大地拖累恢复进程。

在电话会议中,这位59岁的首席执行官(自1994年以来便成为了瑞安的掌门人)批评了英国当局对所有从西班牙前往英国的乘客实行14天隔离的要求,并称此举取缔了两国之间的交通往来。他说:“英国政府对于加泰罗尼亚的疫情感到恐慌”,但“他们应该控制的是加泰罗尼亚的乘客,而不是在毫无科学依据的情况下将整个西班牙作为防控目标。”他还抨击了爱尔兰政府,因为该国要求从英国入境的乘客进行14天的隔离,而有15个国家的乘客则被列入了没有任何限制的“绿名单”。他提到,以色列和摩洛哥也在仓促之间实施了强制禁令或限制,此举在短时间内让来自欧洲的航班出现了暴跌。对于奥莱利来说,这些国家强制实施的禁令所产生的不确定性与健康风险是不成正比的,也就是说“即便6000万的客运量亦是一个具有挑战性的数字。”

瑞安的竞争力一直在于其强大的成本优势,这一点从2020财年便可见一斑。不计燃油费用,这家爱尔兰航空公司单位乘客的平均运输成本为31欧元(约合41美元)。瑞安称,该数字要比排名第二的匈牙利廉价航空Wizz低26%。作为对比,挪威航空公司和汉莎航空的单位乘客成本分别为87欧元(约合114美元)和101欧元(约合132美元)。这一竞争优势也让瑞安能够在正常时期(每天2400班次,覆盖242个机场,包括阿伯丁至马拉喀什,里斯本到第比利斯等)给出37欧元(约合48.5美元)的平均票价。

这家不提供不必要服务的航空公司去年吸引了1.49亿名乘客,也让瑞安成为了欧洲总客运量最大的承运商,击败了汉莎航空(1.45亿),国际航空,英航与西班牙航空的总和(1.18亿)、易捷航空(9600万)以及法航荷航集团(8800万)。在营收方面,瑞安去年斩获了85亿欧元,排名第五,但其11.3亿欧元(约合14.8亿美元)的运营利润相当于汉莎的三分之二,IAG的43%,然而,瑞安的销售额不到汉莎的四分之一,以及IAG的三分之一。瑞安的利润率也是一马当先,其2020财年的利润率为13.3%,几乎是汉莎的三倍,比国际航空高出30%。

着眼于疫情之后的策略

奥莱利对于预测可谓是乐此不疲,瑞安之所以能在客运量和利润率领域独占鳌头,其超低成本功不可没,而在疫情后同行撤退的同时进行扩张将进一步拉低支出成本。这一策略基于奥莱利对行业疫情后发展趋势的判断。他认为欧洲航空公司已经开始制定将持续数年的缩减计划,而且这种大规模的收缩举措将继续实施。多家航空公司已经撤出了航空领域,包括服务于英国和法国区域机场Flybe,汉莎旗下的廉价航空德国之翼,国际航空旗下廉价航空Level of Austria,以及为地中海旅游胜地提供服务的SunExpress德国业务,它是由汉莎和土耳其航空成立的合资企业。

这些大型航空公司也在削减运力。法航荷航集团在2021年将砍掉五分之一的航班,意大利航空则砍掉了短途路线,以专注于远距离目的地。在电话会议中,奥莱利抨击了法国和德国向法航和汉莎发放的110亿欧元(约合129亿美元)国家援助,他称这些补贴是“非法的”而且会助长“不公平竞争”。与此同时,包括易捷航空和挪威航空在内的竞争对手都在推迟或取消新飞机的订单,继而有可能会对空运反弹后的载客能力造成限制。由于大多数航空公司都削减了其运营规模,越来越多的起飞和降落空位将处于闲置状态。瑞安希望启用众多空出来的空位,从而让公司在此前的机场进行全力扩张。

奥莱利认为,欧洲航空公司能够在危机衰退后创造业务的唯一方式就是提供折扣机票。他说:“我们将看到航空公司为刺激市场将推出大量的折扣票,这是件好事情,因为此举会让那些大量被封锁的人选择空运出行,并提升整个市场。”他说,旗舰级航空公司将能够提供一些超低折扣,因为它们手中有大量的政府补贴。另一方面,为了与之抗衡而被迫推出超低折扣价的独立航空公司则会像Flybes和Levels一样走上破产之路。

为了保住其超低成本航空公司的老大地位,同时提供较低的折扣机票,瑞安航空则需要下调其飞机的支出基础,但这并非是小打小闹式的下调,而是大幅削减。第一季度85%的成本削减主要源于劳动力成本的收缩。由于航班班次接近零,其位于欧洲的1.7万名飞行员和空乘人员大部分都处于休假状态。各国政府则为这些员工提供失业福利。例如在西班牙,政府直接支付雇员损失的薪资。在英国,航空公司雇员的降薪部分由政府补贴。尽管如此,瑞安的员工成本从2019年第一季度的2.72亿欧元(约合3.56亿美元)降至6900万欧元(约合9000万美元),降幅达到了75%。

在劳动力方面,奥莱利设定了两个目标:第一,面对1.7万名雇员团队,公司几乎没有裁员;第二,大幅降低了未来四年的薪资水平。这些举措为瑞安应对未来的折扣价格战奠定了胜利的基础。作为保住工作的交换条件,瑞安成功地将飞行员(到目前为止薪资最高的人群)的平均薪资降低了20%,空乘人员的平均薪资降低了10%。瑞安集团旗下最大子公司的首席执行官艾迪•威尔森说:“我们不会对劳动力成本基础进行一刀切式的削减。飞行员占总成本最高,因此他们的削减幅度也是最大的。”他也表示,整体节省的成本远超10%。威尔森还说:“我们需要将这些人紧紧握在手中,这样,我们便可以在市场反弹之时迅速恢复,并获得市场份额。”

低油价应该算是一个利好消息。奥莱利说:“因为需求的持续疲软,我们将看到供应过剩的情况。我们认为油价在未来2-3年内不会启高,会在40美元左右徘徊。”如果航空旅行在这一期间恢复到2019年的水平,瑞安将节省一半的燃油成本,超过10亿欧元(约合13.1亿美元)。

加倍押注MAX机型

奥莱利策略的一个重要支撑点在于大量获取波音不断推迟发布的737 MAX机型。简而言之,奥莱利希望MAX机队能够在空运市场反弹以及在竞争对手蓄势待发时,为瑞安提供志在必得的额外座位。他说:“瑞安将成为少数能够继续增长的航空公司,我们是为数不多的能在2020、2021和2022年有不少飞机订单的航空公司之一。”瑞安是一家单机种航空公司。其所有的470架飞机都是737s系列机型。这也是为什么瑞安可以像其同行、737拥趸西南航空公司那样,将维护成本控制得如此之低的原因。瑞安有210架MAX机型订单。奥莱利希望波音能够获得美国官方的最终批准,重新在9月份推出MAX机型,同时,他也希望波音在圣诞节之前能够为瑞安交付40架MAX机型。

MAX在重启方面所遭遇的长期磨难并未动摇他对于该机型的信念。奥莱利说:“我们依然是MAX坚定的拥护者。”他表示,MAX机型提供的位置比当前的737s多4%,并节省16%的燃油成本,因此对于降低单位乘客成本来说至关重要。尽管众多航空公司都取消了MAX订单。奥莱利将使用其作为少数买主的地位,向波音争取更大的交易优惠。在210架的订单中,有三分之一都是“待定”订单,意味着瑞安可购买也可放弃。这一地位为瑞安提供了强大的议价优势。

奥莱利还预计,随着竞争对手的撤退,欧洲各大机场将充斥着闲置的停机位。他认为到明年夏季,各大机场将提供大量的租金折扣,以填满闲置机位。他解释说:“那些损失了大量运力的机场会推出优惠举措,从而吸引像瑞安这样的航空公司帮助它们在其他机场缩减规模期间恢复增长。”机场费用是瑞安去年第一季度最大的一笔开支,这项支出的减少将进一步巩固奥莱利的低价策略。

对于奥莱利来说,最乐观的前景莫过于瑞安在2021年夏季回到疫情前水平,也就是每天1.5亿的客运量。但他也预测,整个市场会比去年小很多。因此,如果实际情况就是这样,那么瑞安将获得大量的市场份额。去年,奥莱利设立了在2024年之前实现2亿客运量的目标,也就是高达34%的同比增幅。他如今已经不再定义具体数额了。但根据笔者的估计,所有的因素,包括更低的劳动力成本、MAX机型重新交付,以及机场机位租金的降低都已显现出来,并为瑞安的腾飞奠定了基础。如果瑞安实现了其目标,那么它的市场份额将从当前的15%跃升至约20%,这个现象在这种老旧行业中实属罕见。

在疫情经济期间,最吸引眼球的故事莫过于行业中受到疫情影响的佼佼者通过制定计划,在绝境中东山再起。我们很难想象还有什么航空公司发展计划比奥莱利的这个更具野心——有些人认为该计划荒谬至极,或者比奥莱利的计划更能吸引人的关注。(财富中文网)

文中所有欧元对美元的汇率都是按照当前外汇汇率折算。

译者:Feb

Reeling from COVID-19, Europe's airlines are unveiling a survival strategy centered on shrinking their schedules in the years to come. They are canceling aircraft orders, shrinking schedules, and are beginning to exit airport gates from London to Rome in an industry-wide rush to downsize.

That's that flight plan that Ryanair's CEO Michael O'Leary laid out in a video announcing results for the June quarter (its Q1 2021), followed by a conference call with analysts on July 27. On screen, the famously outspoken O'Leary set a new standard earnings-call-casual, sporting a baggy checked shirt unbuttoned halfway to his waist, and peering over wire rim glasses balanced near the tip of his nose. O'Leary's presentation came in two basic parts: First, an accounting of the tough measures Ryanair is taking to minimize the sweeping damage from the pandemic, steps that have amazingly lowered its cash burn to zero, and second, his blueprint for making the airline that transports the most passengers around Europe a lot bigger––by Fortune's estimates, as much as one-third bigger than pre-COVID a half-decade from now.

Ryanair's flights, said O'Leary, were virtually all grounded from mid-March to the end of June, dropping the number of passengers carried for the quarter from 42 million to just 500,000. Revenues cratered 99% from 2.2 billion to €128 million ($168 million)*. During the meltdown, O'Leary is launching an extraordinary attack on costs to preserve cash. Total expenses dropped 85%, from just over €2 billion to €313 million ($2.62 billion to $410 million). Those deep reductions held the loss for the quarter to just e185 million. Relative to pre-COVID sales, that's lowest among the airlines Ryanair's size (FY 2020 revenues: €8.5 billion or $11 billion) or larger.

But the campaign isn't mainly stanching the next quarter's losses. It's the centerpiece of his broad strategy for the future: Driving the expense base to levels that create an enduring competitive advantage that enables Ryanair to soar in the recovery while rivals remain stuck on the tarmac.

For all his optimism on how Ryanair will thrive post COVID-19, O'Leary foresees a return to normal that's grindingly slow, both overall and for his airline. He's now predicting that Ryanair will fly around 40% of last year's passengers in July, rising to 60% in August, and 70% in September, and remain at that level at least through March of 2021. That trajectory would bring total traffic to just 60 million for FY 2021, down 60% from 149 million in FY 2020 (ended in March of this year). And the outlook's worsened since May, when O'Leary predicted 75 million passengers for FY 2021, and a return to 80% of the regular schedule starting in October.

O'Leary warns of substantial risks that Ryanair's numbers won't reach even those downsized-estimates. "The best we can come up with at the moment is 60 million in passenger traffic assuming there are no other widespread lockdowns as a result of the second wave of COVID-19," he declared on the conference call. Besides citing the danger posed by new spikes, O'Leary cautioned that European governments are imposing sudden and "arbitrary" restrictions on air travel to other nations on routes that are really safe, and that those "badly managed overreactions" could greatly slow a recovery.

On the call, the 59-year old CEO, who's headed Ryanair since 1994, bashed the British authorities for recently requiring that all people flying from Spain to the U.K. undergo a 14 day quarantine, quashing traffic between the two countries. "The U.K. government panicked" over an outbreak in Catalonia, he charged, when "they should have controlled arrivals from maybe Catalonia, not on a national basis with no scientific basis." He also skewered Ireland for requiring that arrivals from the U.K. go into two-week quarantine, while passengers from 15 nations on a "Green List" face no constraints. Both Israel and Morocco, he noted, have been imposing bans or restrictions on short-notice that have pummeled air travel from Europe for brief periods. For O'Leary, the uncertainty around the course of these state-mandated clampdowns––in his view, unjustified by the health risks––means that "even the 60 million will be a challenging figure."

Ryanair's edge has always been its big advantage on costs, as shown by its numbers for FY 2020. The Irish carrier spent an average of €31 ($41) to transport a passenger, excluding fuel. According to Ryanair, that's 26% lower than the figure for number two, budget carrier Wizz Air of Hungary. By contrast, per passenger costs were €87 ($114) for Norwegian Air Shuttle and €101 ($132) for Lufthansa. That edge enables Ryanair to charge average fares of €37 ($48.50) on what in normal times were its 2400 daily flights to 242 airports from Aberdeen to Marrakesh and Lisbon to Tbilisi.

The 149 million customers lured last year by those no-frills bargains made Ryanair Europe's top-ranking carrier measured in total passengers, beating Luftansa (145 million), IAG, uniting British Airways and Iberia Airlines (118 million), EasyJet (96 million) and Air France KLM (88 million). In revenues, Ryanair at e8.5 billion ranks fifth, and but its €1.13 billion ($1.48 billion) in operating profits equals two-third the number at Lufthansa and 43% at IAG, though the Irish carrier's sales are less than a quarter of Lufthansa's and lower than one-third of IAG's. Ryanair also has the best margins, boasting return-on-sales of 13.3% in FY 2020, almost triple the number for Lufthansa, and 30% above IAG.

A strategy beyond COVID

As O'Leary never tires of proclaiming, it's the super-low cost base that puts Ryanair first in customers and margins. Driving the expense even lower is the ticket to expanding post-COVID while rivals retreat. That strategy is based on O'Leary's view of how the industry will evolve post-COVID. He observes that European airlines are already planning reductions in schedules that will last for years, and that the big shrink will continue. A number of carriers have already left the skies, including Flybe serving regional airports in the U.K. and France, Germanwings, a low-cost carrier owned by Lufthansa, Level of Austria, operating budget flights for IAG, and the German operations of SunExpress, a Lufthansa-Turkish Airlines venture that served resort destinations in the Mediterranean.

The big flag carriers are also slashing capacity. Air France KLM is scrapping one-fifth of its flights in 2021, and Al Italia is scuttling short-haul routes to focus on long-range destinations. On the call, O'Leary denounced the €11 billion ($12.9 billion) in state aid being awarded by both France and Germany to Air France and Lufthansa, subsidies that he brands "illegal" and promoting "unfair competition." At the same time, competitors––including EasyJet and Norwegian––are delaying or canceling orders for new jets, potentially constraining their capacity to grow as traffic rebounds. As most carriers downsize their operations, an increasing number of takeoff and landing slots will sit idle. Ryanair hopes to fill many of those slots as they become available, enabling it to expand at airports previously at full capacity.

O'Leary reckons that the only way the European carriers can generate business as the crisis ebbs is to offer bargain fares. "We'll see lots of stimulus from low fares," he says, "and that's a good thing, because it will get a lot more people flying who've been locked down, and lift the entire market." The flag carriers will be able to offer those ultra-low prices, he says, because they're flush with government cash. On the other hand, the independent carriers that are forced to match the steep discounts will close down, following the Flybes and Levels.

To reign as the lowest-cost carrier in skies raining deep discounts, Ryanair needs to downshift its expense base to a plane that's not just lower, but substantially lower. That's been his chief quest during the four month lockdown. The key part of the 85% reduction in Q1 was the shrinkage in labor costs. Since flights fell close to zero, the vast bulk of its 17,000 pilots and cabin crews across Europe went on furlough. Governments provided the workers with unemployment benefits. In Spain, for example, the government replaced a part of lost wages directly. The U.K. topped off reduced payments from the airline. All told, Ryanair lowered its "staff costs" from €272 million ($356 million) in Q1 of 2019 to €69 million ($90 million), a drop of 75%.

On labor, O'Leary harbored two long-term goals: First, keep almost the entire workforce of 17,000 employed, and second, substantially lower pay levels over four years, positioning Ryanair to triumph in the raging fare wars ahead. In exchange for preserving jobs, Ryanair succeeded in securing reductions of 20% from its pilots, by far the highest-earners, and around 10% on average from cabin crews. "We don't break out the total reduction in the labor cost base," says Eddie Wilson, CEO of the largest subsidiary o the Ryanair group. "The pilots are the chunkiest part of the total, and they took the biggest reduction." He does confirm that the overall savings are well over 10%. Wilson adds: "We need to hold on to those people so that we can ramp up quickly and gain market share when the market rebounds."

Low oil prices should provide a tailwind. "We'll see an oversupply because of weakening demand," says O'Leary. "We think oil will be modestly in somewhere around $40 for the next 2 to 3 years." If flying returns to 2019 levels in that span, Ryanair would lower its jet fuel bill by half, or over €1 billion ($1.31 billion).

Doubling down on the MAX

A cornerstone of O'Leary's strategy is securing big deliveries of Boeing's long-delayed 737 MAX. Put simply, O'Leary is counting on a fleet of MAXs to provide the extra seats that Ryanair aims to fill as traffic rebounds and rivals continue to hunker down. "Ryanair will be one of the few airlines that can grow," he says. "We're one of the few that has has major deliveries coming in 2020, 2021, and 2022." Ryanair is a single-aircraft carrier. All of its 470 planes are 737s. That's a major reason that like fellow 737 denizen Southwest, it's able to hold maintenance costs so low. Ryanair has 210 MAXs on order. O'Leary's hope is that Boeing will get final approval from the U.S. authorities to re-launch the MAX in September, and that it Boeing can deliver Ryanair 40 MAXs by Christmas.

The MAX's long struggle to relaunch hasn't shaken his faith in the aircraft. "We're committed supporters of the MAX," says O'Leary. The MAX, he says, offers 4% more seats than Ryanair's current 737s, and save 16% in fuel costs––and is hence crucial to driving down costs per passenger. While many airlines are cancelling orders for the MAX. O'Leary is using his position as one of the few buyers to push Boeing for a better deal. Of the 210 on order, about one-third are "options," meaning that Ryanair can either buy the planes or walk away. That position should gives Ryanair strong leverage in the negotiations.

O'Leary also expects that as rivals retreat, Europe's airports will be swamped with empty gates. He expects that by next summer, airports will be offering big discounts on rent to fill the unused slots, and that Ryan as just about the only carrier that's expanding, can secure great deals."There will be airports that have lost significant capacity who will be engaging in incentives to get someone like Ryanair to deliver them growth where others are cutting back," he explains. Savings in airport charges that were the biggest expense in Q1 of last year would further bolster his go-low crusade.

For O'Leary, the best-case outlook is that Ryanair returns to its pre-COVID level of 150 million passengers a day sometime in the summer of 2021. But he also predicts that the overall market will remain a lot smaller than last year. Hence, if that scenario plays out, Ryanair will gain a heap of market share. Last year, O'Leary set a goal of reaching 200 million passengers by 2024, a giant increase of 34% over last year. He's no longer setting a specific number. But by this writer's estimates, all the factors, lower labor costs, renewed MAX deliveries, and dropping airport rents are falling into place to build the runway. So achieving 200 million is highly doable. If Ryanair gets there, it will lift its current leading market share from 15% to something like 20%, a feat seldom seen in an old-line industry.

In the pandemic economy, few stories are more intriguing than those about nimble players in industries pounded by the pandemic that are laying plans to prosper from the carnage. It's hard to think of a flight plan that's more audacious––some would say outrageous––than O'Leary's, or one that will be more fun to watch.

*All conversions from Euros to dollars are made using the current exchange rate.

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