A “best-in-class” record gives Ryanair the flexibility to spend up to EUR 1.5 billion by 2025.
The Dublin-based airline is quickly emerging from the pandemic and will continue to dominate the European aviation market, according to the new Barclays study.
At a time of “rising inflation and broader consumer uncertainty,” analysts said Ryanair had a structural competitive advantage, “underpinned by its low costs.”
“We believe strong leisure pent-up demand ahead of summer 2022 and a clear growth strategy into 2026 will continue to drive strong earnings growth for Ryanair.
“We expect it to continue taking a share of the fragmented European short-haul market by building on its pricing power,” the analysts said.
“This would give Ryanair a tailwind in the short term and strengthen its robust competitive position in the medium term.
“With summer fast approaching and demand indicators pointing to strong travel pent-up demand, we believe this summer will see market share gains unfold among short-haul airlines from which Ryanair will benefit.”
Market share gains and fuel hedges protecting it from the worst of the energy crisis could push the airline’s share price up more than 30 percent to €18, Barclays said, from the current price of just over €13.
With the reopening of the travel sector earlier this year, the stock briefly rose to these levels before falling sharply as the Ukraine war began.
There is also potentially good news for Ryanair CEO Michael O’Leary as Barclays makes a bullish prediction that the stock could rise as high as €23.
If the stock price hits or exceeds €21 for 28 days by March 2024, it would be O’Leary’s personal turn under his existing terms to pocket €100 million via stock options.
With plans for growth on new routes being the most ambitious in the industry, Ryanair’s market share could grow to 18 per cent by 2025, which would result in “greater pricing power” for the airline, the statement said.
The aviation industry is hit by higher costs due to rising energy and fuel prices.
But Ryanair had a comparative advantage that would only increase as it introduced more new aircraft into its fleet. The fuel hedge also protects Ryanair from rising oil prices better than almost any other airline, Barclays said.
https://www.independent.ie/business/bumper-balance-sheet-gives-ryanair-scope-to-pay-shareholders-15bn-by-2025-41646406.html The shock balance sheet gives Ryanair “leeway” to pay shareholders €1.5 billion by 2025