Ryanair’s €1bn profit upgrade lifts rival airlines’ shares
Ryanair profit upgrade today on better-than-expected Christmas traffic has lifted competitors’ shares on the FTSE as well as its own.
Ryanair’s stock rose 6.6 per cent to €16.23 as it raised full-year profit guidance to beyond €1bn (£850m) after saying Christmas and New Year bookings were “stronger than expected”.
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The boost led the budget flyer to raise its full-year profit-after-tax guidance range from its €800m to €900m range to between €950m and €1.05bn.
“On the basis of current trading, Ryanair expects to finish close to the mid-point of this new range,” the airline said.
Ryanair reported that bookings between January and April are one per cent higher than this time a year ago.
And the budget flyer also forecast that full-year group traffic will grow to 154m passengers, compared to its previous prediction of 153m.
Its positive trading update also led to a jump in rivals’ stocks, helped by a drop in oil prices as US-Iran tensions cool.
Easyjet’s share price climbed as much as 5.3 per cent to 1,515p while British Airways owner IAG rose 3.4 per cent to 656.4p per share.
Ryanair also warned its Austrian subsidiary Laudamotion is still struggling. Net losses widened from €80m to €90m there. Ryanair said Laudamotion “continues to underperform” due to an ongoing pricing war with rivals.
“This is a direct result of intense price competition with Lufthansa subsidiaries in both Germany and Austria who are engaged in below-cost selling,” Ryanair told investors.
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Laudamotion now expects to carry 6.5m passengers in the year to March 2020 but average fares are €15 below budget, leading to the widening losses.
“Ryanair has defied fears about the airline market suffering from weaker demand and too much supply,” Neil Wilson, chief market analyst at Markets.com, said.
“Ryanair remains very well placed to take advantage of consolidation in short haul European air travel. But its low cost model is facing headwinds.”
Liberum stuck to its ‘buy’ rating for Ryanair stock. The broker told investors: “We raise our current year forecasts by 24 per cent, having been below the midpoint of the previous range. We increase our target price to €19 from €12.50.”