LCG Research Team: Airline companies are feeling the pinch as frequent terrorist attacks, combined with the UK’s decision to exit the European Union, are increasingly weighing on business.
Following weak results from easyJet and Lufthansa last week,Ryanair (+6.06%) posted a 4.5% rise in its first quarter profits although fares fell by 10%.
The company warned of ‘significant risks to the downside’ due to the Brexit and mounting terrorism in Europe yet did not give a profit warning just yet. Nevertheless, Ryanair expects Q2 fares to be at least 6% lower; this would result in a significant 8% decline in tariffs through the first half of this year.
The second half doesn’t look brilliant either, with an estimation of 10% to 12% fall in ticket prices.
Fortunately, soft oil prices help partially squeezing the operating costs, hence largely contribute in smoothening results in a slower business environment.
Ryanair considers ‘pivoting growth away from the UK’, though. Despite decent sector volatility, 80% of analysts covering the stock remain buyers with a 12-month target price at 14.66p.