Ryanair down on ticket price view
Ryanair Holdings predicted ticket prices falling for the rest of 2017 as Europe’s biggest discount carrier competes for customers amid excess capacity. Afterwards the share price had it worst drop in four months.
Ryanair Holdings predicted that ticket prices would decline in the rest of 2017 as Europe’s biggest discount carrier competes for customers amid excess capacity. The shares fell the most in four months.
The Irish airline said fares would slide 8% in the six months to March 2018, accelerating from a 5% drop in the financial first half. Ryanair reaffirmed its threat to shift aircraft out of the UK because of Brexit, saying it needed clarity by 2018.
Europe’s carriers are facing a squeeze as the low oil price encourages airlines to add routes and flights that might otherwise be unprofitable.
Ryanair, which has the lowest operating costs in the industry, is increasing its passenger target for financial 2018 by 1-million people to 131-million.
“Our bookings are strong but it’s very competitive,” chief financial officer Neil Sorahan said on Monday. “With low fuel, there are guys in the market who possibly shouldn’t be there. There’s been a lot of capacity that’s come into places like Spain and Portugal, the Middle East, Tunisia and Turkey.”
INCOME JUMPED
Ryanair shares fell as much as 5.6%, the most since March 7, and were trading 2.4% lower at €17.62 in late morning trading in Dublin, where it is based. The stock has gained 21% in 2017, valuing the company at €21bn.
Buoyed by Easter falling in April in 2017, net income jumped 55% in the first quarter to June, propped up by a 1% increase in ticket prices.
While Ryanair stuck by its full-year guidance for earnings of €1.4bn to €1.45bn, it cautioned that the remaining nine months would be difficult.
Cantor Fitzgerald analyst Rob Byde said a consensus figure of €1.49bn for full-year earnings that suggests Ryanair will beat the targeted range is unlikely to be modified on the basis of Monday’s comments. Analysts are generally “more bullish than the company itself”, he said of the caution around fares.
EASYJET, EUROPE’S NO 2 DISCOUNT CARRIER, FELL ALMOST 6% AFTER CAUTIONING FARES ARE SET TO DROP
EasyJet, Europe’s No 2 discount carrier, fell almost 6% on Thursday after cautioning that fares are set to drop into 2018. Adding to the carrier’s concerns is the possibility that UK flights may have to be curtailed from April 2019 if the aviation elements of Britain’s EU exit are not tackled soon, with the clock “running down”, Sorahan said.
Ryanair wants clarity on the issue before publishing its summer 2019 schedule in the second quarter of 2018 and may cancel UK flights in autumn of that year if there is no certainty about the legal basis of future services, shifting aircraft to continental Europe.