Ryanair and the Covid Crisis

December 30, 2020 10:37

“Never let a good crisis go to waste” is something Winston Churchill once famously advised.

One man who seems determined to follow this advice is Irishman Michael O’Leary, CEO of Ryanair, Europe’s largest airline group by market cap. Mr O’Leary is taking advantage of the current crisis in two ways.

Firstly, cost cutting. O’Leary has reduced the wages of pilots and cabin crews in return for job retention. He is also said to be re-negotiating fees from Ryanair’s airports, even threatening to move to rival hubs in one or two cases.

Secondly, he is positioning the airline for what he thinks will be a strong recovery of the European airline sector.

In a sign of confidence, Ryanair has ordered 210 of Boeing’s 737 MAX jets, following their recent recertification by the FAA. He also quickly signed up more than 300 slots from Stansted Airport, after these were vacated by rival EasyJet in a cost cutting exercise.

Investors obviously like what they see. The airline’s share price has bounced by about 25% since November with the expectation that customer demand will recover quickly with the deployment of Covid vaccines. This is a much stronger recovery than its European rivals.

However, news emerged on Tuesday that Ryanair planned to put restrictions on non-EU shareholders, including depriving them of their vote. This will apply to UK shareholders from 1st of January, so expect a little turbulence.

Depicted: Admiral Markets MetaTrader 5 - Ryanair Holdings Plc Daily Chart. Date Range: 29 May 2020 - 30 December 2020. Date Captured: 30 December 2020. Past performance is not necessarily an indication of future performance.

Depicted: Admiral Markets MetaTrader 5 - Ryanair Holdings Plc Weekly Chart. Date Range: 12 April 2015 - 30 December 2020. Date Captured: 30 December 2020. Past performance is not necessarily an indication of future performance.

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