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Ryanair profit beats analyst estimates and yields improvement; flybe makes large aircraft order

Analysis

Ryanair's shares closed 1.8% higher, after gaining as much as 4.2%, as Europe's largest LCC reported a quarterly profit that exceeded analysts' estimates. The LCC also forecast fares may rise by as much as 15% in the current period (after increasing 5% in the Jun-2010 quarter).

Summary
  • Ryanair reports quarterly profit exceeding analysts' estimates, leading to a 1.8% increase in shares.
  • Ryanair forecasts a potential 15% increase in fares for the current period.
  • Net and operating profits for Ryanair in the quarter declined by 23% and 24% respectively due to the volcanic ash cloud crisis.
  • Other European LCCs such as easyJet, Vueling, and Air Berlin experience share price gains.
  • Flybe signs a contract with Embraer for the purchase of 35 E175 jets, with a potential order value of up to USD5.0 billion.
  • Daily share price movements of selected LCCs on July 20, 2010.

Net and operating profits in the quarter to Jun-2010, however, declined 23% and 24%, respectively, on a year-on-year basis, with the carrier being "adversely impacted" by the volcanic ash cloud crisis.

See related article: Ryanair remains profitable and maintains full year profit target; profits hit by ash cloud in 1Q2011

Among the other listed European LCCs, shares in easyJet gained 1.2%, while Vueling rose 1.9% and Air Berlin gained 0.3%. Shares in Norwegian remained unchanged, while Cimber Sterling and Dart Group shares were down by 4.4% and 4.5% respectively.

Among the non-listed European LCC, Flybe signed a contract with Embraer yesterday, covering the purchase of 35 E175 jets. The agreement also includes 65 options and 40 purchase rights, giving the order a potential for 140 E175s. The total value of the contract, at list price, is USD1.3 billion and could reach USD5.0 billion, if all options and purchase rights are exercised. The first aircraft is scheduled for delivery in 2H2011.

See related article: "Flybe to the Moon..." Behind the UK airline's massive Embraer order

Selected LCCs daily share price movements (% change): 20-Jul-2010

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