Ryanair raises funds to ‘capitalise on opportunities’ amid airline industry struggle

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Ryanair Holdings plc (LON:RYA) shares rose on Friday after it raised roughly €400mln from a share placing overnight to further strengthen its already-bulging coffers to take advantage of any expansion opportunities.

The Irish budget airline group, which already has over €3.9bn in cash on its balance sheet and 333 fully owned Boeing 737s, said the struggles of the airline market due to the coronavirus pandemic is “likely to result in long-term impacts for the sector which it expects will create opportunities for Ryanair to grow its network, and expand its fleet, to take advantage of lower airport and aircraft cost opportunities that are likely to arise”.

Management said the placing should help “better position the group to move quickly to capitalise on such opportunities should they arise” as well as “de-risking” its debt repayments over the next 12 months.

As part of an accelerated bookbuild process, 35.4mln shares were issued at a price of €11.35, a 2.6% discount to yesterday’s close.

“Traders have reacted well to the news as this is more of an offensive move by the company, as opposed to a defensive strategy – they are not scrambling around for cash,” said David Madden at CMC Markets. 

Earlier this week the airline revealed a 53% fall in August passenger numbers.

Travel restrictions in the EU are on the rise analysts at UBS said, adding that they think the suspension of the European airport slot rules is “likely to continue to put downward pressure on both long and short haul capacity”, with business travel likely to be subdued through to next year.

UBS research shows travel restrictions remain high at around 85% of routes and while some countries and regions have relaxed travel restrictions, others have increased restrictions.

Scheduled short-haul flights are showing a decline of 37% for the first week of October, UBS noted, but only around 4% and 3% declines for November and December.

“It is to be seen how business traffic re-mobilises in 4Q as this could also impact how capacity develops given the seasonal shift from the 3Q leisure heavy quarter to more reliance on business in 4Q,” analysts said.

The shares were up 4% to €12.10 by late morning.

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