Ryanair, Europe's Greenest And Cleanest Airline To Shut Bases And Cut Jobs

The Irish low-cost airline has cautioned its airline staff that it will shut down bases and cut jobs as the delivery of Boeing 737 Max aircraft has been postponed to autumn according to the memo issued on 27^th January.

Ryanair Holdings Plc does not take delivery of aircraft in the peak season of summer i.e. June, July and August, while Boeing had said that it would deliver aircraft at the earliest in the month of September or October. Meanwhile, the Irish low-cost airline expected early delivery of one of the new 737 Max planes that it ordered in March or April.

The company is planning to cut jobs over the approaching week and staff would be informed accordingly in the first or second week of February. However, the company has not disclosed the actual number of positions under the scanner.

Ryanair executive Eddie Wilson wrote in a memo that the company’s summer schedule was heavily dependent on the delivery of those ten aircraft and added that the airline would reduce the frequencies of the flights followed by closure of bases.

The world’s largest aerospace company, Boeing, has revised its estimate for 737 Max as it is under scrutiny by the US regulators and awaits the certification on the plane’s safety regarding software updates. However, Boeing anticipates the deliveries to recommence in the mid-2020.

Since March 2019, the Aerospace Group’s 737 Max aircraft have been grounded across the globe, due to two deadly crashes which occurred and were blamed on the 737 Max aircraft’s faulty systems. More than 300 people died in those two air accidents.

According to the third quarter 2019 results, Boeing’s revenue was down by 21 per cent to $19,980 million due to lower 737 deliveries and higher defence & services volume.

(Source: Q3 FY19 report, Company’s website)

In the third quarter of 2019, the Commercial Airplanes revenue was recorded at $8.2 billion due to lower deliveries of 737. The operating margin decreased to 0.5 per cent in the third quarter of 2019, due to lower 737 deliveries, which were partially offset by a higher margin on the 787 programs.

The manufacturing costs surged by $0.9 billion to produce 737 aircraft during the third quarter of 2019. However, there was no significant change with reference to concessions and other considerations. The company delivered 62 Commercial Airplanes during the period. For approximately two years beginning in late 2020, the 787-production rate will be reduced to 12 airplanes per month given the current global trade scenario. The value of Commercial Airplanes backlog was worth around $387 billion for nearly 5,500 airplanes.

The company is progressing its 777X program through pre-flight testing and is in line to make its first flight in early 2020. The company’s recent orders include twenty-eight 787 airplanes for Korean Air and Air New Zealand, and six 777 freighters for China Airlines.

Business overview: Ryanair Holdings Plc

Incepted in 1996, Dublin Based low-cost airline services group, holding company of Ryanair Limited, Ryanair Holdings Plc (LON:RYA) offers economical travelling on airline routes to the United Kingdom and continental Europe, Ireland, Israel, and Morocco. The Group has its own website through which it offers travel-related services such as insurance coverage and convenience solutions to its customers along with lodging and boarding services. The company has its own fleet.

Recent business performance of Ryanair Holdings Plc

(Source: Company’s filings, London Stock Exchange)

The group announced its interim financial report on 04th November 2019 for the first half of the fiscal year 2020 period ended 30th September 2019. The revenue of the group rose by 11 per cent to €5.39 billion during the period.

The Group’s balance sheet has been rated as BBB+, as the company remains debt-free. This shall allow the company to stand in difficult market conditions. However, the company has taken a prudent approach for the remaining part of the year. The company anticipates ancillary revenues to exceed traffic growth. The company has recently cut down PAT guidance to €800 million to €900 million for the full year.

The traffic was up by 11 per cent to 85.7 million guests in the first half of the fiscal year 2020 as compared to 76.6 million in the previous year comparable period. Also, the Group’s revenue per guest improved by 1 per cent and revenue from ancillary operations was up by 16 per cent as the fares were lowered by 5 per cent.

The airline group makes sure that it is consistent with its flying schedule with 90 per cent of flights arriving on-time, excluding the delays caused by ATC. The company got 5 new bases opened during the reported period including Southend & Berlin, while Armenia & Georgia are now covered under Ryanair's destination network.

Ryanair Holdings Plc’s Share price performance

(Source: Thomson Reuters) Daily Chart as on Jan-29-20, before the LSE market close

At the time of writing at 09:24 AM Greenwich Mean Time, on 29th January 2020, the shares of Ryanair Holdings Plc were trading at a current market price of EUR 14.91 per share, which were up by 0.13 per cent from the last closing price on the previous day. While writing, the group’s market capitalisation was approximately EUR 16.29 billion.

The shares of Ryanair Holdings Plc traded at a high-price mark of EUR 16.97 on 10th January 2020 and at a low-price mark of EUR 8.39 on 16th August 2019 in the last twelve-month period. The Group’s shares were trading at 77.71 per cent higher than the last twelve-month low-price mark and at 12.14 per cent lower from the last twelve-month high-price mark as can be seen in the price chart at the current trading level.

While writing, the stock’s traded volume stood at 296,083. The stock’s 5-day daily average traded volume of the Group was 2,015,228.20; 30 days daily average traded volume- 2,290,176.50 - and 90-days daily average traded volume – 2,492,524.14. The beta of the Group’s stock was recorded at 1.14, which indicates higher volatility.

The Group’s shares have generated a positive return of 27.54 per cent in the last quarter. Also, from the start of the year till date, the Group’s stock was up by 1.78 per cent. Since last month, the Group’s stock has given investors a positive return of 2.44 per cent.Â

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