Cantillion: “New” Ryanair pleases customers and shareholders

Ryanair shares yesterday traded close to the €6.78 mark at which they closed on September 3rd, the day before the airline issued the first of two profit warnings that wiped around €1 billion off its value on two occasions last year.

They ended the day yesterday at €6.703 in Dublin, more than 6.6 per cent up, having gone past the €6.76 mark at one stage. Post close they slid a little bit further, but they were still at a healthy enough premium. The company’s value increased by around €600 million through the day.

Anyone who bought the stock at the €5.33 at which is closed on the day of the second of those profit warnings in November could have made a 27 per cent profit at the higher prices at which the airline traded yesterday morning, and as near as makes no difference at the closing value.

You could argue that the markets over-reacted to the profit warnings. In fact some investors got the jitters again late last week and the shares slid on Friday, partly explaining yesterday’s pronounced gain, which may also have been down to factors other than simply the numbers that the company published in the morning.

The airline summed up the bottom line with those numbers pretty neatly itself when it said that the third quarter loss of €35 million was in line with previous guidance.

It laid the blame firmly with falling air fares and a weak sterling, factors that it singled out in November. So in short, Ryanair did not produce any surprises yesterday.

However, its statement did indicate that there may be positive things to come. Bookings for its first quarter of the 2015 financial year, April 1st to June 30th, are significantly higher than for the same period in 2013, even allowing for the fact that Easter is in late April, compared with the last weekend in March last year.

Initial soundings at least indicate that the new, cuddly Ryanair is finding favour with customers and, for now at least, that is having no impact on costs, a fact that will also please shareholders.