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Ryanair (RYAAY) Hurt by Low Travel Demand and MAX Groundings

Zacks Equity Research

We recently issued an updated report on Ryanair Holdings plc RYAAY.

The company, like other carriers, is bearing the brunt of plummeting air-travel demand due to the COVID-19 pandemic. The company’s fiscal 2020 profits were hurt by more than €40 million. The airline’s traffic fell more than 5 million in the period due to travel restrictions and aircraft groundings. With apprehensions about fleet grounding in April, May and June, the carrier expects to operate less than 1% of its total scheduled flights in the first quarter of fiscal 2021.

Consequently, Ryanair expects to incur a loss of more than €200 million in the fiscal first quarter. During fiscal 2021, the carrier expects to transport less than 80 million passengers that indicates an approximate 50% drop from its original target of 154 million passengers.

Additionally, the company is taking a hit from the Boeing 737 MAX groundings. Due to delivery delays of the aircraft, the company does not expect to receive its first MAX aircraft before October 2020. High fuel costs are also hurting Ryanair's bottom line. Notably, fuel bill increased 14% year over year in fiscal 2020.

However, Ryanair’s strong liquidity position looks impressive. Ryanair’s cash and cash equivalents at the end of fiscal 2020 stood at €2.57 million, higher than short-term debt of €382.3 million. This indicates that the company has enough cash to meet its short-term debt burden.

Ryanair Holdings PLC Price

 

Ryanair Holdings PLC Price

Ryanair Holdings PLC price | Ryanair Holdings PLC Quote

 

Zacks Rank & Stocks to Consider

Ryanair currently carries a Zacks Rank #5 (Strong Sell).

A few better-ranked stocks in the Zacks Transportation sector are Scorpio Tankers Inc. STNG, Teekay Tankers Ltd. TNK and Nordic American Tankers Limited NAT. Scorpio Tankers and Teekay Tankers sport a Zacks Rank #1 (Strong Buy), while Nordic American Tankers carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for The Scorpio Tankers’ current-year earnings has been revised upward in excess of 100% in the past 60 days.

The Teekay Tankers stock has seen the Zacks consensus estimate for current year earnings being revised upward by 53% in the past 60 days.

The Zacks Consensus Estimate for Nordic AmericanTankers’ current-year earnings has been revised upward by 36.9% in the past 60 days.

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Ryanair Holdings PLC (RYAAY) : Free Stock Analysis Report
 
Nordic American Tankers Limited (NAT) : Free Stock Analysis Report
 
Teekay Tankers Ltd. (TNK) : Free Stock Analysis Report
 
Scorpio Tankers Inc. (STNG) : Free Stock Analysis Report
 
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