Ryanair profit warning sends airline shares into a tailspin

Ryanair’s profit warning sent aviation shares into a tailspin as European stocks rose generally on news of a US-Canada-Mexico trade pact.

DUBLIN

Ryanair dominated market news with a warning that strikes and high fuel prices could leave profits at €1.1 billion-€1.2 billion for the current financial year instead of the expected €1.25 billion-€1.35 billion.

The airline’s shares plunged 12.5 per cent to €11.48, with the stock falling to a one-year low of €11.335 at one point. Investors offloaded 13.2 million Ryanair shares in Dublin.

Bank of Ireland came under pressure during the day, dropping as much as 1.6 per cent to €6.49 before rallying strongly ahead of the close to end the day at €6.58.

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Dealers said reports of An Post and credit unions entering the Republic's home loan market affected the stock.

Insurer FBD climbed 3.45 per cent to €10.50 after announcing that it intended to repay Fairfax’s convertible bond for €86 million. The underwriter will raise €50 million through issuing a new subordinated bond.

LONDON

Ryanair rival Easyjet slid 7per cent to 1,222 pence sterling after the Irish carrier's profit warning. Aer Lingus and British Airways parent, International Consolidate Airlines' Group dropped 2.57 per cent to 643.2p.

Traders noted that investors feared Ryanair would cut prices aggressively to counter the consequences of industrial action, with a knock-on effect on competitors, while rising oil prices left the entire aviation sector looking vulnerable.

Dublin-based oil and technology distributor DCC gained 2.87 per cent to 7,165. Grocer Tesco fell 1.3 per cent to 236.7p after the UK's Financial Conduct Authority fined its banking arm £16.4 million for failings linked to a cyber attack last year.

Royal Mail shares collapsed as the firm issued an afternoon profit warning after it failed to meet cost-saving targets. In an unscheduled trading update for the half year to September 23rd, Royal Mail said that it expected group adjusted operating profit to be in the range of £500 million-£550 million, compared with £694 million last year. The news sent shares plummeting as much as 20 per cent before closing down 18 per cent, a fall of 85.7p to 391.4p.

EUROPE

Irish-Swiss baker Aryzta climbed as much as 30 per cent after reporting a €470 million loss for the 12 months ended July 31st, but saying it expected the troubled business to stabilise in the current financial year.

However, it surrendered some of those gains when its biggest shareholder, Cobas, questioned plans to raise €800 million. The maker of McDonald's burger buns and owner of La Brea Bakery ended the day 15.16 per cent ahead at 9.48 Swiss Francs in Zurich.

Air France KLM fell 3.99 per cent to €8.61 as Ryanair’s profit warning helped focus investors’ attention on the impact of rising oil on airlines’ earnings.

Fresenius shares topped the Stoxx index with an 8.3 per cent gain after a Delaware judge ruled the German healthcare group could walk away from its $4.75 billion deal for US drugmaker Akorn Inc and rejected Akorn's claim that the merger agreement had been breached.

Linde jumped 6.2 per cent after the German industrial gases maker received approval for its proposed $83 billion merger with Praxair from the Chinese antitrust authorities.

US

Wall Street got off to a strong start of the fourth quarter on Monday, with industrials and automotive stocks rallying after a last-minute deal to salvage the North American Free Trade Agreement.

Auto maker Ford jumped 1.6 per cent while General Motors gained 1.3 percent. General Electric soared 9.6 per cent and was set for its best day in 3½ years, after replacing chief executive John Flannery with board member Larry Culp.

Tesla shares soared 16.1 per cent as signs it had met targets for quarterly production numbers added to relief at chief executive Elon Musk settling a lawsuit with regulators that could have forced him out. – Additional reporting: Reuters