Before all of its recent cancellation turmoil things were going pretty well for the low budget airline. While it moved laterally for the first few months of the year, from the end of March onwards the stock really picked up the pace, culminating in a 6% surging following its full year results at the end of May.
There Ryanair posted a 6% increase in pre-tax profit to €1.32 billion alongside a 2% rise in revenue to €6.6 billion, despite cutting fares by 13% during the same 12 month period. It also managed to grow its passenger numbers by 13%, even as it contended with the ‘difficult trading conditions’ related to terror attacks around Europe and the economic uncertainty caused by Brexit.
These post-FY gains lifted the stock above €18, with Ryanair spending most of summer then trading between that lower level and an upper cap of €18.50. Its first quarter figures towards the end of July failed to help it break out of that bracket, as a Brexit warning issued by CEO Michael O’Leary and the prospect of another 5% fare cut over summer overshadowed a whopping 55% surge in pre-tax profit to €397 million (figures aided by the absence of Easter in the same period the year previous).
The stock did actually spike above €19.50 in mid-August on the news that Air Berlin had filed for insolvency, only to plunge as it was confirmed that Lufthansa had swooped in to buy parts of the airline’s business. Ryanair wasn’t happy about all this, going as far as registering a complaint with the EU competition authorities in order to block the move.
Of course, Ryanair – both the company and its stock – soon found itself distracted by other issues. From mid-September onwards the airline has been embroiled in controversy after it was forced to cancel more than 2000 flights due to ‘a failure within its pilot rostering function’. It was a public relations disaster, with O’Leary repeatedly putting his foot into it, and one that significantly weighed on its stock, leaving Ryanair at a current trading price, and 6 month low, of €15.45.
Those cancellations will likely dominate Tuesday’s interim results, as investors will be keen to see the cost of the disruption. Ditto whether the promised fare cuts will have impacted the bottom line, especially since Ryanair may have found it difficult to keep costs down amidst that September to October chaos.
Ryanair Holdings PLC (LON:RYA) has a consensus rating of ‘Hold’.
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