The stock market brings down Ryanair, here’s why

22 July 202410 months babelfish

Turbulence on the Dublin Stock Exchange on Monday for Ryanair after the publication of the quarterly report: on 30 June the Irish low-cost company recorded a collapse in profits due to cheaper tickets than expected

Black Monday for Ryanair on the Dublin Stock Exchange after quarterly accounts below expectations and weak forecasts for the summer season.

The Irish low-cost carrier closed the quarter to June 30 with net profit almost halved (-46%), to 360 million euros and revenues down 1% to 3.63 billion.

The result caused the airline's shares to slip by 12.5% to 14.30 euros, ending up at the bottom of the Stoxx Europe 600 index. The turbulence spread to airlines listed in London, especially the low-cost ones: Wizz Air gives 6.3%, Easyjet 6.6% and Iag, the parent company of British Air and Iberia, 3.7%, reports Radiocor . By 1pm London time, Ryanair shares were down 15.08%.

All the details.

COLLAPSE IN PROFIT FOR RYANAIR

Ryanair archived the three months to the end of June, the first quarter of the carrier's financial year, with net profit of 360 million euros, down 46% compared to the same period last year (663 million euros ) and well below the 538 million euro profit expected in a company survey of analysts.

IT'S BECAUSE OF TICKET PRICES

Ryanair's profits fell by almost half after ticket prices fell 15% compared to the same period last year, as consumers refused to pay inflated prices for last-minute flights, Reuters reports.

Every time Ryanair removed lower fares for last-minute tickets in recent weeks, the remaining more expensive tickets went unsold and the airline reinstated the lower fares to fill seats, the Michael-led company said. O'Leary.

Ryanair said the average fare cost in June fell to €41.93 from €49.07 in June last year, but rising passenger numbers helped limit the decline in total revenue to 1% to 363 billion euros.

THE POSITION OF THE IRISH LOW COST

Customers increased by 10% to 55.5 million units, but average rates fell by 15% and the quarter this year does not include Easter, which fell in March, the company said.

COSTS INCREASE

Meanwhile, operating costs increased by 11% to 3.26 billion, "a little more than the increase in traffic", reflecting on the one hand the savings on fuel and on the other the increase in costs for personnel and others costs, partly due to Boeing's delivery delays. At the same time, Ryanair said it expects traffic growth in the 2025 financial year of 8% to 198-200 million passengers, provided there is no worsening of delays in deliveries of the American manufacturer's jets.

CEO O'LEARY IS CAUTIOUS ABOUT FORECASTS

Regarding the second quarter forecast, O'Leary explains that “while second quarter demand is strong, prices remain lower than expected and we now expect second quarter rates to be substantially lower than last summer, while previously they were expected to vary from unchanged to a slight increase”.

The final performance of the first half of the year “will depend entirely on bookings close to the departure date and on the returns of August and September. As is normal at this time of year, we have almost zero visibility into the third and fourth quarters, although the last three months of the fiscal year will not benefit from last year's early Easter." As a result, “it is too early to provide meaningful guidance for fiscal 2025, although we hope to be able to do so with our first half results in November,” Ryanair concluded.

ANALYSTS COMMENT

Ryanair's first-quarter result missed expectations by 33% and is expected to lead to downward changes to the earnings consensus, analysts at Bernstein wrote in a note, noting that the company also lowered its forecast for summer prices. “This suggests further weakness in closer bookings,” they add.

For experts at JP Morgan, Ryanair shares are affected by the below-expected accounts and the lowering of prospects for the rest of the summer, Radiocor reports. In view of the weak forecasts for the second quarter, the consensus for the fiscal year 2025 could fall by around 25%-30%, say US bank analysts, who however maintain the 'buy' with a price target of 25 EUR.

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/la-borsa-abbatte-ryanair-ecco-perche/ on Mon, 22 Jul 2024 13:12:17 +0000.