Shares in Ryanair soared on Tuesday morning after the airline group’s chief executive, Michael O’Leary, signalled in an interview that the threat of a double-digit percentage drop in average air fares has been averted.
The carrier’s stock jumped as much as 6.5 per cent in Dublin, before closing 4.6 per cent higher at €15.81, giving the group a market value of €17.6 billion.
Mr O’Leary told Reuters on Tuesday that he no longer saw a risk of double-digit percentage falls in average fares this summer as weakness in demand had “levelled out”. He said a decline of 5 per cent for the period now “looks reasonably accurate”.
Mr O’Leary later told reporters that it would also be reasonable to expect fares to be down about 5 per cent for the final six months of the company’s financial year to the end of next March.
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The share price advance comes five weeks after the stock fell by more than 17 per cent in a single day when it warned it expected fares to be “materially lower” across its crucial summer season when compared with last year, continuing a trend that saw average fares slump by 15 per cent in the three months through June.
Ryanair also confirmed in a statement that it has completed a €700 million share buyback programme that it launched in May, with 38.6 million shares – including underlying American depository shares – being repurchased and cancelled over the period.
The carrier is now proceeding with a follow-on share buyback scheme, having hired Davy to mop up as much as €800 million of stock on its behalf in the open market before the end of next May.
Mr O’Leary also said on Tuesday that relations with Boeing’s new management were “difficult” and that deliveries continued to be behind schedule.
The airline, one of Boeing’s largest customers, said there was a risk it would take delivery of just 20 to 25 of the 737 Max aircraft it had ordered ahead of next summer, rather than the 29 scheduled. This may see passenger traffic for the current financial year to March 2025 coming in a “tad shy” of 200 million – a target the airline chief had originally set in late 2016.
Still, Eddie Wilson, chief executive of Ryanair DAC within the wider group, indicated he was confident that Boeing would overcome its production issues.
Ryanair estimated in early July that its passenger numbers would reach a record 198-200 million in this financial year, up 8-9 per cent on the previous 12 months.
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