Ryanair has today posted a loss for its key summer period for the first time in 30 years as Covid-19 restrictions pulverized demand and it warned it may only carry half its normal passenger numbers next year. 

But a stronger than expected balance sheet bolstered investor sentiment and the airline avoided a sharp drop in share price seen by UK rivals in the wake of the announcement of a 4-week lockdown in England on Saturday. 

Shares in Ryanair rose over 4% in Dublin trade today while EasyJet and British Airways owner International Airlines Group each fell by over 5% on the UK lockdown. 

Covid-19 restrictions slashed Ryanair passenger numbers by 80% in the six months to September 30, the first half of its financial year and the period when it typically makes most of its annual profit, pushing it to a €197m loss. 

That was the first summer loss recorded by the airline since 1990. It recorded a profit of €1.15 billion the same time period last year. 

Today's loss was less than the €244m forecast in a company poll of analysts. 

Ryanair did not give a profit guidance for the full-year, but chief executive Michael O'Leary said it was likely to post a deeper loss in the second half of the year, which would make it the airline's first annual loss since 2009. 

Michael O'Leary in September had described the upcoming winter as a "write-off".

He said today the airline still planned to fly 40% of last year's traffic levels in the winter, but said European traffic could fall as low as 25% of last year's levels. 

The airline said it expects to fly 38 million passengers in the year to end-March compared with 149 million last year.

But it warned that the number could fall further "if EU governments continue to mismanage air travel and impose more uncoordinated travel restrictions". 

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Ryanair is planning to fly between 50% and 80% of its pre-pandemic capacity next year, depending on how the pandemic develops, its chief financial officer Neil Sorahan said on Morning Ireland this morning. 

Neil Sorahan also said the group had been working very hard over the past number of months to reduce its cost base. 

"We acted quickly at the start of the pandemic to reduce discretionary capital expenditure within the business, cancelled our share buyback and of course, underpinned the strength of the balance sheet with a finance raise back in September where we issued 400 million shares in a management-led placing and €850m bonds at very attractive pricing," he said.

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"We believe that this balance sheet coupled with our industry leading cost base will put us in a very strong position coming out the other side of the Covid-19 pandemic," Mr Sorahan added.

Ryanair, which has one of the airline industry's strongest balance sheets, said its cash on hand grew to €4.5 billion at the end of September from €3.9 billion in the previous quarter, bolstered by a €250m supplier reimbursement from Boeing. It also owns aircraft worth over €7 billion. 

Goodbody analyst Mark Simpson said the balance sheet was stronger than expected. 

"Ryanair has delivered everything investors might have wanted from the release in what remains unprecedented negative trading conditions," Mark Simpson said. 

Ryanair said it had yet to finalise terms with Boeing on compensation for the 18-month delay of deliveries of the grounded 737 MAX jet and on a possible new plane order. 

Neil Sorahan told Reuters that Ryanair was also talking with Airbus about a possible order of the A320 or A321, but added that talks with Boeing for more MAX jets were "more advanced." 

Ryanair expects to receive its first MAX jet in late January or early February and expects to have at least 30 in time for its peak summer season next year, Mr Sorahan said.

Michael O'Leary has forecast that Ryanair would emerge from the Covid-19 crisis with a "meaningfully" lower staff, plane and airport costs and was in talks with Boeing for extra aircraft to take advantage of opportunities created by struggling rivals. 

"There has never been a more exciting opportunity for growth, certainly in the European airline industry," he told a conference call with investors. 

"It's going to rebound very strongly with huge pent-up demand and Ryanair will, in my view, be by far the best position," he added.

Citi analyst Mark Manduca said in a note that the results for the first half were slightly better than expected, however, the recent imposition of Covid-19 lockdowns in Europe was likely to be the key driver for Ryanair and the EU aviation sector in the near term.

Ryanair shares closed 4.6% higher in Dublin trade today.