Ryanair

“The FTSE is sitting still at 7,511 as we start the final quarter of the year. Stronger action on the markets can be seen overseas where Japan’s Nikkei 225 has hit a 27-year high,” says Russ Mould, Investment Director at AJ Bell.

Ryanair

“A cocktail of problems has left Ryanair looking very weak and its shares trading at a two-year low. A 12% downgrade to earnings guidance is a severe blow to the airline although chief executive Michael O’Leary is far from apologetic.

“There isn’t the usual commentary you would normally expect from someone in his situation, such as ‘we’ll try harder’, ‘we are optimistic this is a one-off event’ or ‘we’re confident we can make up some of the shortfall in the second half’. Instead, you’ve got the straight-talking boss telling the facts as they are, plus a warning that he can’t rule out a further downgrade to earnings guidance.

“You could argue the way O’Leary has delivered his stark warning is reflective of a CEO who doesn’t want to create false hopes for shareholders. He is honest and open, which is perhaps the best approach when trying to manage expectations.

“In a nutshell, strikes are disrupting its business and making individuals less confident over using Ryanair in the future in case their flights are also delayed or cancelled. Costs are going up, prices are coming down as a result of weaker forward bookings and now it has a surplus of winter cabin crew after cutting some flights.

“The stock market clearly thinks Ryanair’s problems are negative for other parts of the airline sector, given how EasyJet’s share price fell by nearly 6% on Monday morning and British Airways’ owner International Consolidated Airlines down by 2%.”

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