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Ryanair Holdings plc (NASDAQ: RYAAY) lost nearly 10% on Monday even though it reported a strong fiscal first quarter.
Why is Ryanair stock down today?
Investors are concerned because the management lowered its traffic guidance for the full year. On CNBC’s “Squawk Box”, Neil Sorahan – the Chief Financial Officer of Ryanair said today:
We’d be somewhat cautious looking into the winter. We’re conscious that interest rates have been rising in the U.K. and Europe and passengers may need some price stimulation to encourage them to travel.
The ultra-low-cost carrier now expects to fly 183.5 million passengers in fiscal 2024. Its previous guidance was for 185 million, as per the press release.
Year-to-date, Ryanair stock is still up more than 30%.
Ryanair Q1 financial highlights
- Net profit more than tripled to €662.9 million ($737.5 million)
- Revenue also went up materially from €2.60 billion to €3.65 billion
- Consensus was €506.2 million profit on €3.59 billion in revenue
- Traffic increased nearly 11% year-over-year to 50.4 million in Q2
Ryanair noted 23% higher operating costs in its recently concluded quarter. According to the Finance Chief, part of the weaker outlook is related also to a delay in Boeing deliveries.
Boeing has been unlucky in past few weeks. They have a temporary fix in place. But reality is this will have a knock-on impact into our autumn and domino effect impact on deliveries through balance of the year.
Ryanair may have to cut fares
Ryanair is currently booked roughly 10% for the third quarter and under 5.0% for the final quarter of the year, as per CFO Sorahan.
We don’t have a huge amount of visibility into winter. We’re cautioning that we may have to stimulate, we don’t know if we’ll have to, but it’s a possibility.
Fare increases, he revealed, will be lower (sequentially) in the current quarter. Plus, Ryanair has a strong enough balance sheet to even cut fares to boost demand, if need be, the Chief Financial Officer concluded.
Wall Street currently has a consensus “buy” rating on the airline stock.
The post Ryanair stock loses 10% despite a strong Q1: here’s why appeared first on Invezz.
