Turmoil in market deepens as Ryanair shares hit turbulence
Aviation market turmoil cranked up a notch yesterday as another €480m was wiped off Ryanair's value and investors dumped 3.5pc of Aer Lingus' stock.
Analysts were quick to point out that turbulence was linked to economic fears in the UK rather than inherent weaknesses in the airlines, but the selling frenzy continued nonetheless.
Ryanair was the biggest casualty on this side of the Atlantic, losing 8pc of its value yesterday and recording its worst day on the stock market since the profit warning of January 2004.
The latest fall means a massive €750m has been wiped off the airline's share price in just two days, while chief executive Michael O'Leary is sitting on personal paper losses of €20m.
The airline's dismal week in the markets began in earnest on Tuesday, when rival EasyJet spooked the markets by reporting a 2.2pc dip in the level of seats filled in December.
Yesterday morning, matters were compounded when Citigroup issued a research note downgrading their earnings forecast for Ryanair for 2008 and 2009, amid fears of higher fuel prices and a weaker pound against the euro.
Later, a mid-morning announcement of a new base in Bournemouth did little to appease UK-wary investors as some 45pc of Ryanair's flights already pass through the economically troubled UK.
Negative
"There's a lot of negative UK sentiment building at the moment, and people could be wondering why they're increasing their exposure there," said one analyst.
A spokesman for Ryanair, however, insisted that Bournemouth was a "good market, with lots of potential", adding that the airline was growing "throughout Europe" not just in the UK.
Meanwhile, industry-watchers don't think they've seen the last of Ryanair's fall. "If the Bank of England do something positive on interest rates it could give the shares a boost. If they do something negative the shares could fall even further," said one analyst, referring to today's BOE meeting.
Over at Aer Lingus, some 18m shares were off-loaded yesterday, marking one of the stock's busiest ever days and making the airline the fourth most-traded stock on the ISEQ.
The trade, which covered more than 3pc of Aer Lingus stock, was seen as particularly significant since less than 30pc of the airline's stock is in freefloat.
Aer Lingus shares closed down almost 2pc at €2.06, suggesting a seller-led boom rather than a buying spree, with the bulk of the activity linked to one trade processed by Goodbody's.
Well-placed sources suggested the trades had involved "a number of institutions". A spokesman for Ryanair declined to comment on the trades; however, sources close to the company confirmed the airline was not involved.
- Laura Noonan
