Share price slide knocks €1bn off Ryanair value

Close to €1bn was wiped off Ryanair’s market value yesterday as its share price slid by over 6%.

This was despite the low-fare carrier reporting a bumper set of third quarter results and management upping its full-year profit guidance for a fourth time in its current financial year. As expected, Ryanair’s latest figures — covering the three months to the end of December — showed further progress towards what is set to be a record year for the company.

Third-quarter net profit came in at €49m, with basic earnings per share amounting to 353c. For the same period last year, Ryanair posted a net loss of €35m and losses per share of 250c. Group revenue, for the last three months, was up by 17% year-on-year at just over €1.13bn, with passenger numbers rising by 14%, annually, to 20.8m people.

“These strong results confirm that our ‘Always Getting Better’ customer programme and our expanded business schedules, coupled with our substantial fare and cost advantage over competitor airlines, is drawing millions of new customers to Ryanair,” said CEO Michael O’Leary.

On the back of yesterday’s results, Ryanair upped its current full-year (to the end of March) net profit guidance for the fourth time to a new range of €840m-€850m.

Management added that the company’s fourth-quarter passenger figures will be up by 25% and it will become the first European airline to carry 100m passengers in one year in its next financial year. The airline also said it is likely to grow 20% in Germany, one of its key future markets, in the next four years and should add two more bases there in the coming six months.

Despite the good news, Ryanair’s share price slipped by 6.13%, yesterday, to €9.76, knocking its market value down by nearly €1bn from €14.4bn to €13.5bn. Mr O’Leary said the market was probably “spooked” by Ryanair’s cautious outlook, in which it suggested expectations for its performance over the next 12 months should be “tempered”.

A lack of advantage, due to already hedged fuel costs, is likely to drive competition from other operators and result in modest profit growth at best.

Regarding the potential sale of Aer Lingus, Ryanair said IAG still has not approached it regarding its near 30% stake in the former State-controlled carrier, but added that it will consider any offer should it be forthcoming. Mr O’Leary said Ryanair’s management was not distracted by IAG/Aer Lingus talk and is focused on continuing to grow its own business out of Ireland and elsewhere. He added that the sooner the Government sells out of Aer Lingus, the better it will be for the company and for Ireland. He also said that the Government’s real aviation strategy should be encouraging Ryanair to grow more out of Ireland rather than worrying about an Aer Lingus sale.