MIAMI – Ryanair (FR) CEO Eddie Wilson, speaking on the company’s podcast, said he feels confident about the low-cost airline’s financial position. This is despite the ongoing COVID-19 pandemic, which has had devastating effects on the airline industry.
“I think when this ends, we will come back stronger,” said Wilson. “We have a strong balance sheet. That allows you to be the last person standing in an apocalyptic scenario.”
Ryanair owns almost three-quarters of its fleet, which means it has avoided many costly payments to lessors as scheduled routes are reduced and aircraft sit grounded.
Low-Cost Carriers During COVID-19
Low-cost carriers (LCC) have seen a boom in popularity over the past few decades. Many of the big players such as Southwest Airlines (WN), EasyJet (U2), and FR have gained notoriety for cheap fares and limited meal service. This model has become so popular, in fact, that traditional airlines began offering basic economy fares as competition.
Once seen as rebellious, low-cost carriers now seem best-positioned to survive the pandemic. LCC’s exist because of their low expenses and minimal overhead. Many airlines, like FR, choose to own most of their aircraft as opposed to leasing them. Others, such as American-based Allegiant (G4) have opted for a fleet of used aircraft. This model is balance-sheet friendly and limits asset depreciation.
“Last Man Standing”
Eddie Wilson is confident, but in the current state of the industry, few appear to be safe. This goes for LCCs as well, despite their relative success as others have struggled. Earlier this week, Scandinavian LCC Norwegian Air (DY) announced major COVID-related changes and layoffs at its London-Gatwick base.
While many are choosing to err on the side of caution during these times, Wilson has a different approach. “We may as well all hole up in a cave forever and think this thing is going to pass. “We’re going to have to live with it.”
“So if you’ve got the money, you’ve got the aircraft, you’ve got the people, you’ve got the cost base at the airports, then you are in a much better position than those that are scrambling around, running out of cash, looking for short-term deals all the time, selling their aircraft, firing their people.”
In these trying times, making the best of the given situation might just be the winning formula.
Featured Image: FR Boeing 737-8 on approach. Photo: Marco Macca/Airways