Europe LCCs hit by falls in wider market; Ryanair to cut UK winter capacity by 16%
European LCC airline stocks were hit yesterday by falls in the wider market, with European shares reaching a three-week closing low on Tuesday. Poor US consumer confidence data fuelled worries over the economic recovery, with concerns also persisting over bank funding.
- European LCC airline stocks experienced a decline due to falls in the wider market and concerns over economic recovery and bank funding.
- Vueling and Norwegian Air Shuttle were among the hardest hit LCCs, with share price slumps of 6.0% and over 5% respectively.
- Dart Group, the parent company of Jet2.com, was the only European LCC to record a positive share price movement, with an 8% increase.
- Ryanair's shares slipped 1.5% as the airline announced plans to reduce UK winter capacity by 16% from Nov-2010, resulting in a loss of over 2 million passengers at UK airports.
- London Stansted will see a 17% reduction in winter capacity, with 22 aircraft based at the airport compared to 24 the previous winter.
- Ryanair will also reduce winter capacity at most of its other UK bases, except for Edinburgh and Leeds Bradford, potentially saving the carrier GBP10 million.
For more information see related article: US consumer sentiment slumps in June, but air travel vacation plans still holding up
Among the hardest hit LCCs were Vueling, which witnessed a 6.0% reduction after the previous day's 5.8% gain, while Norwegian Air Shuttle also experienced a share price slump of more than 5%.
Dart Group was the only European LCC to record a positive share price movement yesterday, with an 8% increase. The company, the parent of Jet2.com and Flower Welch Coolchain, released its financial results for the 12 months ended Mar-2010 on 24-Jun-2010, reporting a "reasonably satisfactory" profitable result in the year. See related article: 'Geriatric' low-cost airline, Jet2.com survives through diversity.
Meanwhile, shares in Ryanair slipped 1.5% on the same day the carrier announced plans to reduce UK winter capacity by 16% from Nov-2010, with the carrier stating the decision will result in the loss of more than 2 million passengers at UK airports over winter 2010 on a year-on-year basis.
At London Stansted, winter capacity will be reduced by 17% from Nov-2010. Ryanair will base 22 aircraft at Stansted in winter, a reduction from 24 the previous winter, with 135 fewer weekly frequencies and a loss of up to 1.5 million passengers at Stansted between Nov-2010 and Mar-2011. The LCC will also reduce winter capacity at most of its other UK bases, with the exception of Edinburgh and Leeds Bradford. Ryanair CEO, Michael O'Leary, added the decision could save the carrier GBP10 million.
Selected LCCs daily share price movements (% change): 29-Jun-2010
Source: Centre for Asia Pacific Aviation, Yahoo! Finance & Reuters