Ryanair’s shares dipped 3% this morning as its annual results delivered a loss, albeit a smaller one than expected, against the backdrop of a recovery in airline travel.
Michael O’Leary, chief executive, warned passengers to expect price rises over the summer of a “high single-digit” percentage. He told BBC’s Today programme: “There will be higher prices into that peak summer period because there’s so much demand for the beaches of Europe and those price rises are going to continue”.
There was better news for passengers beyond the summer, with Mr O’Leary predicting that “prices will be low next winter”.
Mr O’Leary also hopes to see passenger and luggage “pinch points” at Manchester and Heathrow airports resolved by the end of June, although he added that “getting through airports this summer is going to be challenging, and we’re encouraging all our customers to show up earlier and allow more time to get through security”.
The airline giant delivered full-year revenue of €4.8 (£4.1) billion, a 193% increase from the previous year’s revenue of €1.6 (£1.4) billion, thanks to the resumption of airline travel after the travel restrictions. Passenger numbers recovered strongly to 97 million in the year to March 2022, compared to 27 million in the previous financial year, although this remains some way below their pre-pandemic high of 149 million.
However, there was less positive news on fares, which fell by 27% to just €27 (£23). Ryanair pointed to the “delayed relaxation of EU Covid-19 travel restrictions until July 2021, combined with the damaging impact of the omicron variant and Russia’s invasion of Ukraine” resulting in fares requiring “significant price stimulation”.
Fuel price hedging
Ryanair delivered a reduction in its net loss from €1.1 (£0.9) billion in 2021 to €0.4 (£0.3) billion in 2022, despite the 237% increase in fuel costs to €1.8 (£1.5) billion. It has hedged 80% of fuel in 2023 and 10% in 2024, which it believes will provide “a considerable competitive advantage for the next 12 months, and will enable us to grow market share strongly over the coming year.”
It also announced almost 800 new routes for the coming year, together with 15 new bases, including in Corfu, Newcastle, Stockholm and Venice. Ryanair also pointed to its success in increasing market share across Europe, with a market share of 35% in Poland, 40% in Italy and over 55% in Ireland.
Ryanair has also taken delivery of 61 B737-8200 “Gamechanger” aircraft, offering lower fuel consumption, which it hopes will “widen the cost gap between Ryanair and all other European airlines for the next decade.”
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Looking ahead, Ryanair is “cautiously optimistic” that peak 2022 fares will be “somewhat ahead” of peak 2019 levels due to pent-up demand from the pandemic. It hopes to return to “reasonable profitability” in the 2023 financial year, but warns that recovery “remains fragile”. Over the longer term, Ryanair forecasts a strong growth in passenger numbers, with a target of 225 million passengers by 2026.
Ryanair’s share price hit a high of €18.44 (£15.76) pence in February, before falling by nearly 35% to €11.88 (£10.11) pence in March. With the shares currently trading at around €13 (£11), it will be interesting to see if the optimism about passenger numbers drives a recovery in Ryanair’s share price.
If you’re planning to travel abroad this year, we’ve produced a list of our Best Covid-19 Travel Insurance Policies of 2022 to help you compare the different levels of cover available.
Here’s what you need to know about buying and selling Ryanair shares.
Note: investing in shares comes with no guarantees. When buying company shares, it’s possible to lose some, or even all, of your money.
That said, over the long term – a minimum of five years (preferably longer) – it’s possible for share-based investments to produce superior returns to those available from low interest-paying deposit accounts, especially once inflation has been factored in.
Why own stocks?
It’s worth asking yourself why you want to buy shares. Are you looking for capital growth, income from dividends or a combination of both? Your investment objectives will determine what type of shares you invest in, whether high-growth technology shares or more defensive companies with a reliable dividend stream.
Most investors look for sound fundamentals, including a track record of consistent earnings growth, a strong market position or products or services with future growth potential. These should provide a solid platform for future share price growth.
That said, other factors such as takeover rumours can drive up a company’s share price. Investors may also be attracted by recovery plays, with a depressed share price providing the potential for a rebound.
How to buy stock
Once you’ve decided which company to invest in, there are several steps to buying shares.
1) Open an account
Whether you’re a seasoned share trader, or new to stock market-based investments, you’ll need to open an account with a regulated brokerage to buy shares in Ryanair.
Stockbroking is a competitive market place and services for DIY investors come in a range of guises – from online investing platforms run by some of the biggest names in financial services, to investment trading apps that work off your smartphone or tablet.
Before opening an account, bear in mind the following:
- Keep your ultimate financial goals in mind
- Be prepared to ride out stock market ups and downs
- Aim to keep trading costs to a minimum
- Remember that share investing can prompt tax charges, for example, when selling part of your portfolio, unless you use a tax-efficient wrapper such as an ISA.
And before buying any shares, it’s worth asking yourself these questions:
- Should I take financial advice?
- Am I comfortable with the level of risk in question?
- What’s my investing budget?
- Can I afford to lose money?
- Do I understand the company in which I’m looking to invest?
- Am I protected if my platform provider/adviser goes out of business?
2) Where is Ryanair traded?
The ticker symbol for Ryanair Group plc is RYA (Nasdaq: RYAAY). It is listed on both the Euronext Dublin (open for trading from 8am to 4.30pm) and the Nasdaq (open for trading from 9.30 am to 4pm, Eastern Time). You should be able to buy US and Irish shares through most brokerage accounts.
Buying shares in US dollars or Euros incurs a foreign exchange fee (typically around 1%) unless you fund the purchase from a US dollar or Euro account.
Most brokerages also charge a slightly higher transaction fee for buying US or European, rather than UK, shares although it’s worth comparing the fees charged by different brokers if you plan to trade US or European shares regularly.
If you are buying US shares, you will be asked to complete a W-8BEN form (valid for three years) which allows you to benefit from a reduction in withholding tax for qualifying US dividends and interest from 30% to 15%.
Holding US or Irish shares also carries exposure to foreign exchange risk. If the pound strengthens against the dollar or Euro, your shares will be worth less in sterling (and vice versa).
3) Do your research
To find out more about Ryanair, visit the company’s online investor relations page.
It’s also worth comparing Ryanair’s valuation to other comparable airline companies. One way of doing this is to look at the relative price-earnings ratios – shares trading on a high price-earnings ratio have high expectations of substantial future growth.
Another useful research tool is brokers’ 12-month share price forecasts, which are available on financial websites. There are a number of brokers following Ryanair shares, and their price forecasts give an indication of the upside and downside potential of Ryanair’s share price over the next year.
4) What’s your investing strategy?
People tend to invest in one of two ways: either with a lump sum purchase, or via smaller, steadier amounts over time.
The latter method is often referred to as a means of ‘pound cost averaging’, a stock market hack which helps you pay less per share on average over time in falling stock markets. Rather than waiting to build up a lump sum, it means an investor’s money can be put to use in the market straightaway. However, drip-feeding your investment may sacrifice capital growth if the share price is rising and you will also pay more in share-trading fees.
5) Place an order
Once you’re ready to buy shares in Ryanair, log in to your investing account or trading app. Type in Ryanair’s ticker symbol (RYA) and the number of shares you want to buy or the amount of money you’re prepared to invest.
Many brokerages also allow you to add a ‘stop loss’ once you have bought the shares, which allows you to limit your losses if the share price falls. For example, if you buy shares at £10, and set a stop loss of £9, your shares would be sold if the share price falls below £9, limiting your potential loss to 10%.
6) Review Ryanair’s performance
Whether your share portfolio is crammed full of companies or holds only a handful of stocks, it’s vital you review how each component is performing on a regular basis: monthly, quarterly, or annually.
Doing this gives you the opportunity to review performance and ask if any adjustments to your holdings are required – to maintain the status quo, buy more stock, or sell existing shares.
How to sell stock
At some point, you will want to sell your holdings. To do so, log in to your investing platform, type in the ticker symbol (RYA) and select the number of shares you want to sell.
Note that if you’ve made a substantial profit, you may be liable to pay Capital Gains Tax (CGT) when you come to sell your holdings, especially if your shares were held outside of a tax-exempt wrapper such as an Individual Savings Account or a Self-Invested Personal Pension.
The CGT tax-free allowance for the tax year 2022-23 is £12,300. Find out more here about CGT rates and allowances.
How to invest in Ryanair via a fund
Investing directly in individual stocks can be an absorbing and, hopefully, profitable experience. It may also qualify you for shareholder perks specific to the company in question.
Investing directly in individual companies can, however, leave you vulnerable to stock market volatility and unforeseen swings in share prices.
That’s why financial experts recommend that most people invest in a diversified mix of asset classes and funds that hold a ready-made portfolio of upwards of fifty different company shares.
Being one of the larger European airline companies, Ryanair is found in many European funds and investment trusts, as well as tracker-style Exchange Traded Funds.