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Summary
- Ryanair share price surged as much as 5.18 per cent in the early morning deals to a four-day high of GBX 12.60
- The company’ net revenue for the reporting period sank by 78 per cent to €1.18 billion following a 80 per cent-fall in the traffic
- The air carrier’s operations may get affected in the upcoming days following the second lockdown in the United Kingdom.
Shares of Ryanair, the Swords-headquartered air carrier, rallied more than 5 per cent in the morning trades on Monday, 2 November 2020, even after the low-cost airline posted a loss for the summer period for the first time in 30 years. Ryanair Holdings plc (LON: RYA) today reported a loss of €197 million for the first half (April-September period) of the financial year 2020-21. The company had posted a profit of €1.15 billion for the comparable six-month stretch a year earlier.
Ryanair stock performance
Ryanair share price surged to a four-day high of GBX 12.60 in early deals from the last close share price level of GBX11.98. Ryanair shares have largely remained in the negative territory in the present calendar year after the coronavirus pandemic led to a slump in the share prices of almost all enterprises. Though, despite partly recovering from the massive plunge observed in March 2020, the stock is still trading around 16 per cent lower year-to-date (YTD).
Ryanair shares (2 November 2020)
(Source: Thomson Reuters)
Ryanair shares (YTD)
(Source: Thomson Reuters)
H1 financials at a glance
The airline’s grounded operations for the period of mid-March to end-June has had a devastating effect on the revenues of the company. The passenger traffic in the first half dropped to a mere 17 million as against traffic of 86 million in the first six months of FY 19. Ryanair is scheduled to service debt payments of more than €1.5 billion due in 2021 including £600 million UK CCFF and €850 million June 14 bonds. However, the budget-airline has closed the H1 2020 with cash equivalent to €4.5 billion.
Ryanair net revenue for the reporting period sank by 78 per cent to €1.18 billion following an 80 per cent fall in the traffic to 17.1 million. The major chunk of the revenue realised in the H1 2020 was based on the receivables in the second quarter (July-September) of 2020 as the first quarter (April-June) saw almost nil traffic barring a few, very essential flights, the company has informed the exchange.
Cost-cutting
Ryanair has substantially lowered the expenses in the six-month period by cutting costs, cancelling share buybacks, deferring non-essential capital expenditure and participating in EU government’s payroll support schemes. Other than the obviously-low fuel costs, Ryanair has considerably reduced the expenses on employee costs in the H1 to €234.7 million, down 60 per cent from €583.3 million, while the marketing and related expenses fell to 64 per cent to €106.4 million from the comparative expense of €299.1 million in the same period of the previous year.
Restricted operations
Ryanair restarted its operations from 1 July onwards after the government eased restrictions on the flight operations, as well as with regard to the travel within and outside the United Kingdom. Ryanair operations may get affected in the upcoming days following the second lockdown in the United Kingdom.
The recently imposed nationwide lockdown by the UK government and re-imposition of stiffer restrictions in various parts of the nations may hurt the operations of air carriers going forward. Ryanair CEO Michael O'Leary has said that the airline will not be entertaining refund requests for the flights booked for November; however, an alternative flight can be arranged for the customers willing to delay their travel plans for a later date.
Battling through Covid-19
Ryanair has launched the Christmas sale under which a promotional discount of €30 is being offered for travel between 14 December and 5 January. Meanwhile, Heathrow Airport has duly advised all the passengers staying in contact with the respective airline for the latest flight status after the imposition of lockdown.
According to Ryanair, the FY21 will remain a challenging year with the ongoing Covid-19-led uncertainty, following which the company has refrained itself from providing an FY21 PAT guidance. Ryanair is expected to register higher losses in the second half of FY21 as compared to H1, the company added.
