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RYA Shares Drop 3% as New COVID-19 Restrictions Forces Ryanair to Cut Winter Capacity

UTC by Godfrey Benjamin · 3 min read
RYA Shares Drop 3% as New COVID-19 Restrictions Forces Ryanair to Cut Winter Capacity
Photo: Depositphotos

A new set of COVID-19 restrictions will strain Ryanair (RYA) as well as other airline companies globally.

The shares of budget airline Ryanair Holdings Plc (LON: RYA) has slumped by more than 3% at midday on Thursday after the firm announced that it will be cutting its winter travel and booking capacities to 40% from that of last year from its earlier planned 60% due to concerns that a new set of COVID-19 restrictions may be imposed across Europe. The move by Ryanair (RYA) as revealed on Thursday is necessary in order to help stem the spread of the resurging COVID-19 disease.

The COVID-19 disease also is known as the coronavirus disease since it was first discovered in China in December 2019 and stirred a pandemic in most countries beginning in March this year, a tremendous number of businesses particularly in the airline industry has had to downsize their operations as the pandemic’s associated lockdowns greatly affected patronage.

The situation may appear to be at play again for Ryanair as the continued cases of the coronavirus disease has made a case for new measures to be introduced. The proposed cut by Ryanair as necessitated by the impending COVID-19 restrictions will see the airline shrink its passengers from 50 million projected in Sept. to barely 38 million, and further down from the 149 million passengers it reportedly flew in the 2019 fiscal year.

“While the Covid situation remains fluid and hard to predict, we must now cut our full year traffic forecast to 38m guests,” Ryanair CEO Michael O’Leary said “While we deeply regret these winter schedule cuts they have been forced upon us by Government mismanagement of EU air travel. Our focus continues to be on maintaining as large a schedule as we can sensibly operate to keep our aircraft, our pilots, and our cabin crew current and employed while minimising job losses.”

Implications of the Impending COVID-19 Restriction on Ryanair, Other Airlines

The first global restrictions the COVID-19 pandemic ushered in affected the global airline industry so much as many are still battling to recover. A new set of COVID-19 restrictions will only strain the likes of Ryanair (RYA) as well as other airline stocks globally.

Besides the probable drain in the airline’s stock price, the associated menace includes what O’Leary noted in his earlier quoted statement which involves job losses. The pangs Ryanair (RYA) will face should any new COVID-19 restrictions be imposed may model that seen back in March as most European airlines stocks crashed after President Donald Trump announces the restrictions in the United States.

Seeing the impending drought ahead, O’Leary has appealed to EU governments “to immediately, and fully, adopt the EU Commission’s Traffic Light System, which allows for safe air travel between EU states on a regional basis to continue (without defective travel restrictions) for those countries and regions of Europe, who are able to demonstrate that their Covid case rates are less than 50 per 100,000 population.”

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