RYANAIR ENJOYED its best day in the markets for two months in Dublin trading, leading airline shares, as oil prices' retreat from last week's record highs came to an end.
Ryanair advanced 24 cents, or 8.7 per cent, to €2.99, the highest since January 22nd. The shares have fallen 35 per cent this year, valuing the Dublin-based airline at €4.46 billion ($6.97 billion).
"It's oil-related," said Joe Gill, an analyst at Goodbody Stockbrokers in Dublin with a "buy" rating on the shares.
"It's also a case of people looking forward into summer 2008 and asking which carriers are going to be left standing," he said. "Ryanair is one of the few you'd feel confident will be fitter, bigger and stronger."
Aer Lingus advanced 9 cents, or 4.6 per cent, to €2.07. John Mattimoe, an analyst at Merrion in Dublin, also raised Ryanair to "buy" from "hold".
The airline's share price is factoring in both lower fares and the higher price of oil, Mattimoe said in a note to investors. It is "unlikely" that both factors would continue for long, he wrote.
EasyJet, which last week said full-year profit may fall short of the Luton, England-based company's forecasts because of the higher oil price, gained 16.5 pence, or 4.6 per cent, to 376 pence. London-based British Airways rose 11.75 pence, or 5.1 per cent, to 241.75 pence.
Oil prices rose slightly yesterday, ending a sell-off from last week's record high as weakness in the US dollar and fresh output disruptions in Africa spurred some buying.
US crude rose 36 cents to $101.22 a barrel, the first gain in four trading days. London Brent crude rose 74 cents to $100.60 a barrel.
US oil prices remain sharply below the record high of $111.80 touched on March 17th, but traders have been reluctant to let the price fall back below $100 a barrel.
"Crude got a boost on the perception that money was coming back into commodities," said Phil Flynn, analyst at Alaron Trading in Chicago.
The dollar retreated broadly yesterday, posting its steepest loss against the euro in two weeks, supporting oil, gold and other commodity markets denominated in the currency.
Energy players added that news of a strike in Gabon had halted 60,000 barrels of daily output from a Shell subsidiary in the west African nation encouraged oil's gains.
Yesterday's boost in oil prices comes after a stretch of losses since last Monday's record, caused by worries the US economic slowdown would hit energy demand growth.
US government data released last week showed oil demand in the world's biggest energy consumer down 3.2 per cent from a year ago, with inventories rising.
European airline shares have plunged in recent weeks on concern that the higher price of oil and an economic slowdown may eat into earnings.
Oil was trading at $100.75 a barrel yesterday, the lowest in three weeks. - (Bloomberg/ Reuters)
