Good time to buy Ryanair shares!
It will ride out crisis so buy shares, broker tells clients
ITS staff hate it, many of its customers have vowed never to use its services again and its boss appears to be running scared.
But now, it seems, is a good time to buy shares in crisis-hit Ryanair.
Market analysts believe that an airline with as much cash and as many assets as Ryanair can never fail. In short, the only way is up.
‘Short of killing its passengers, Ryanair really can’t go wrong, it is such a strong company’, an industry analyst told the Irish Mail on Sunday.
He said: ‘Aside from safety issues, people will put up with almost anything from budget airlines – they have very low expectations.
‘And when you consider that by 2019, Ryanair will have about 540 aircraft in its fleet, making it the largest carrier outside the US, bigger than anything in China even, you can see they look like a safe bet despite everything that’s happened in the past two weeks. Even if they have to pay €100m in compensation, they’ll ride it out.’
This is the view of international stockbroking firm Cantor Fitzgerald, which sent out an email to its clients this week urging them to consider Ryanair shares.
The shares have taken a hit in recent weeks since the pilot shortage and rostering problems forced the cancellation of thousands of flights over the winter, affecting more than half a million people.
On Friday, Ryanair was forced by the British Civil Aviation Authority to make compensation options clearer to passengers.
Following complaints about customer service, the regulator had set a deadline of 5pm on September 29 for the airline to comply with rules about how it informs passengers of their rights.
The new approach has made it easier for passengers affected by the cancellation to rebook onto other airlines.
But some passengers who had already accepted refunds for the cost of their flights have claimed they have been ‘locked out’ of the new arrangements.
This came after a fresh round of around 18,000 flight cancellations over the winter affected up to 400,000 passengers, with a number of the cancelled flights either arriving at or leaving Irish airports.
However, the controversy at Ryanair could make it an even better investment option, according to Cantor Fitzgerald’s brokers, one of whom emailed clients saying he saw an opportunity in buying Ryanair shares.
Prices are currently around 18% below the peak of $120 per share in the middle of August, but the broker thinks they will recover as the reputational damage to the airline’s profits will be minimal as air travellers will buy flights based on price rather than on who runs the service. Fuel savings from the new Boeing 737-800 Max planes Ryanair has purchased should offset the costs of hiring more pilots and in the long term the cost savings will boost income, said the email.
Meanwhile, Michael O’Leary has been noticeably quiet this week as airline regulators lashed the airline over its treatment of passengers, leading some to wonder if he can survive the crisis.