Ryanair share price down 3% after profit hits four-year low

The low-cost airline reported its weakest annual profit in four years on Monday sending its share price tumbling.

Ryanair Source: Bloomberg

Ryanair saw its share price take a tumble on Monday morning after it announced a disappointing set of full-year results, with profit hitting a four-year low and earnings expected to fall even further as European airlines fare wars rage on.

The low-cost airline’s share price fell more than 5% on Monday morning to €10.18, down from €10.76, but has since recovered slightly, trading at €10.40 levels as of 12:15pm GMT.

Ryanair reported full-year 2019 profit of €1.02bn, representing a 29% decline compared with the previous year, driven by lower fares.

Ryanair results: key figures

Revenues rose 6% to €7.6bn due to 7% higher traffic, a 6% cut in average fares to €37, while Ryanair Labs continues to stimulate ancillary sales growth with spend per guest up 11% to over €17.

Despite its disappointing set of annual results, Ryanair approved a €700m share buyback which will commence later this week and run over the next nine to 12 months.

‘We expect to split this approximately €500 million/€200 million between ADR’s and ordinary shares, although the Board has discretion to revise this allocation,’ the company said.

This latest buyback will bring to almost €7 billion of the funds returned to shareholders since 2008.

Ryanair looks to beat rivals in war of attrition

Ryanair has the lowest unit costs of any EU airline, and the cost gap with EU competitors continues to widen.

As weaker European airlines are sold or fail, airports are competing to attract Ryanair’s efficient, high load factor, traffic growth, with its airport costs coming in 35% lower than its nearest competitor. the company said.

‘Frankly, if we are in a period where there are going to be attritional fare wars... profits will suffer for a year or two and I think that is what shareholders should expect,” Ryanair CEO Michael O’Leary said in a video presentation.

‘However, it is clear in my mind that within the next four of five years we will see the emergence of four or five large European airline groups... with much more capacity discipline ...and some upward pressure on pricing,’ he added.


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