Thursday 17 August 2017

'Fundamental challenges' for Ryanair, says broker

'Ryanair has previously said it wanted to be
'Ryanair has previously said it wanted to be "the Amazon of travel".' Stock photo: PA
Samantha McCaughren

Samantha McCaughren

Bernstein, a New York broker, has issued a sell recommendation on the Irish low-fares airline Ryanair, in a note entitled 'Doomed to Grow'. The broker believes that while the company may have a strong summer, it could see a 25pc downside to the company's share price, amid what it claimed were "fundamental challenges".

"There is limited 'white space' left in Europe to penetrate," said senior analyst Daniel Roeska. "This market saturation means, amongst other things, that Ryanair will need to target higher-cost mainline airports to chase further growth.

"This will impact their cost structure and this deterioration in Ryanair's underlying economics is not appreciated by the market."

Among the concerns that it flagged were that ancillary revenues may stay flat. Ryanair has previously said it wanted to be "the Amazon of travel". "Amazon will be the Amazon of travel. Other digital players have more resources to invest and broader global appeal than Ryanair to enable them in designing a compelling travel proposition," said Roeska.

Ryanair had no comment in relation to the Bernstein note. Last month, UBS downgraded the airline from a 'buy' rating to 'neutral', while Citigroup also downgraded it to 'neutral'.

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