Ryanair - Not flying as high as normal as costs mount

Monday, 23rd July 2018 10:27 - by Rajan Dhall

Today Ryanair release the latest quarterly results and look away now. It was only a matter of time till the higher oil price caught up with the airline industry and Ryanair seems to be the first casualty. Since 2014 to late 2017 the company has been on an amazing run but it looks like we may be entering a consolidation period or even a correction as lower air fares and higher commodities prices hit the Co's bottom line. Ryanair's Michael O'Leary commented "As previously guided, Q1 PAT fell by 20% to €319m due to lower fares, the absence of half of Easter in the quarter, higher oil prices and pilot costs.  Traffic grew 7% to 37.6m, despite over 2,500 flight cancellations caused by ATC staff shortages and ATC strikes. Ryanair's lower fares delivered an industry leading 96% load factor. 

The question is, was this move priced in? ancillary revenue rose 25% which is a great positive but in the forward guidance section of the report there is something that bothers me. The Co. have stated 'the recent weaker fare environment and the expected impact of crew strikes on forward pricing mean that Q2 fares will only rise by approx. 1% (previously guided +4%)' This could mean another hit on revenue further down the line and looking at the chart things do not look too positive either.

The last weekly candle showed that price tried to push up but then was swiftly pushed back down toward the end of the week and this is consistent with the results this morning. On the downside, there are a few key areas of support to keep an eye on with the psychological 15p area providing good support in the past. if we break there then 14.015p looks like it could be tested. 

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.