Ryanair maintains 2010/11 outlook and enter Estonian market; looking at larger airports


Shares in Ryanair gained 1.8% yesterday, with the markets buoyed by the airline's investor update in the UK on Wednesday. The stock was trading at levels seen before the recent dividend payment, reaching highs of more than EUR3.95, before falling back slightly to close at EUR3.92.

  • Ryanair's shares gained 1.8% following the airline's investor update in the UK.
  • The carrier plans to slow down its growth until 2013, with full-year guidance for 2010/11 maintained at EUR350 million-375 million.
  • Ryanair announced its plans to launch services to Tallinn Airport in Estonia from various European cities.
  • The airline is considering operating to larger airports, excluding the top three in London, Paris, and Frankfurt, to attract more business passengers and increase yields.
  • Ryanair is in talks with several airports across Europe that it doesn't currently serve.
  • The carrier aims to maintain its 25-minute turnaround time even at larger airports and expects fares to increase in the future as its growth rates slow down.

Commerzbank, following the carrier's investor day on Wednesday, commented: "With current trading developing well, guidance risks are clearly skewed to the upside." During its presentation, the carrier reiterated its intention to slow growth until 2013, with full-year guidance for 2010/11 maintained at EUR350 million-375 million.

Separately, Ryanair yesterday announced plans to launch its first Estonian services with service to Tallinn Airport from Dublin, Dusseldorf Weeze, Edinburgh, London Luton, Milan Bergamo, Osly Rygge and Stockholm Skavsta.

Ryanair CEO Michael O'Leary in Sep-2010 stated the LCC is considering opening routes to all major European airports with the exception of the top three - London Heathrow, Paris Charles de Gaulle and Frankfurt am Main - as slowing growth prompts it to modify its strategy based on operating only to secondary airports.

Mr O'Leary commented that operating to larger airports, while raising costs, would enable the carrier to increase yields by attracting more business passengers. He added that larger city airports are now interested in talking to LCCs, adding that costlier airports are becoming more viable as the carrier reduces its use of facilities such as check-in desks and baggage-handling machines.

He commented: "Almost any airport that we don't fly to is talking to us across Europe. Increasingly in the future there's going to be a spread of bigger airports, as well as secondary ones ... Bigger airports are now realising that easyJet isn't growing and none of the flag carriers are growing, so they're now doing deals with us. And we have such a price advantage over anyone else that we can move in on anyone's route and blow them out of it."

Mr O'Leary added that the carrier would still maintain its 25-minute turnaround even at larger airports and added that fares would likely increase in the future, as the carrier's growth rates slows to 5% or lower, stating: "When fares aren't being reduced every year in 2013, 2014, 2015 there'll be more of a focus on quality, service, customer satisfaction and all that, because the prices will be rising. But are we suddenly going to go from an average fare of EUR34 to EUR100? No!"

Selected LCCs daily share price movements (% change): 30-Sep-2010

Want More Analysis Like This?

CAPA Membership provides access to all news and analysis on the site, along with access to many areas of our comprehensive databases and toolsets.
Find Out More