Ryanair raises €400m in share sale amid Covid crisis

Ryanair has raised €400 million in a share sale announced after stock markets closed on Thursday.

The company said the same was designed to strengthen its balance sheet amid the Covid-19 crisis, and take advantage of “significant growth opportunities” as rivals run into trouble.

“So far 2020 has proven to be the most challenging period in Ryanair’s 35-year history, and an unprecedented difficult environment for the wider European airline sector,” the company said in a statement.

“The group believes that it has responded well, and that the current environment 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.”

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Stockbroking firm Davy managed the share placing, which got under way on Thursday evening and equates to about 3.1 per cent of Ryanair €12.7 billion market value as of the close of European trading.

In a statement on Friday, Ryanair said it was “pleased by the strong support it has received from new and existing shareholders”.

The move comes as Aer Lingus owner International Airlines Group is in the process of seeking shareholder approval for a €2.75 billion share sale to shore up its finances.

Carriers from EasyJet to Finnair have also turned to the stock market to raise funds in recent months amid a slump in passengers during the coronavirus pandemic.

Ryanair has also mounted legal challenges to European Commission authorisations of aid packages for carriers including Air France, Lufthansa, and Portugal’s TAP as the industry deals with the crisis.

“As we look beyond the next year we expect that there will be significant growth opportunities for Ryanair’s low-cost model as competitors shrink, fail or are acquired by government-bailed-out carriers,” the company said on Thursday.

“Post Covid-19 growth opportunities include gaining market share from peers retrenching, further European airline failures and competitive unit cost advantage over other carriers. The placing will provide Ryanair with greater financial flexibility to capture these opportunities.”

Certain directors and members of the senior management team intend to participate in the placing , including group chief executive Michael O’Leary, who intends to subscribe for stock to maintain his current stake of about 4 per cent.

Passenger numbers

Ryanair’s passenger numbers for August were down 53 per cent on the same month last year as Europe’s biggest budget carrier operated around 60 per cent of its normal schedule for the key holiday month.

Still, it has one of the strongest balance sheets in the industry with over €3.9 billion in cash as of June 30th and 333 unencumbered Boeing 737 jets worth about €7 billion.

“Subject to market conditions the group expects to access the bond markets in due course and the enhanced liquidity as a result of the placing will likely optimise that issuance,” it said.

The company also said that it plans to focus on preserving and generating cash and the repayment of €1.9 billion of debt that matures next year.

“The group hopes to accept delivery of its first Boeing-Max-200, and potentially up to 40 Maxs in advance of summer 2021,” it said.

Ryanair’s move to tap the stock market for fresh funds follows on from the carrier spending well over €6.5 billion on share buybacks and other shareholder distributions between 2008 and the middle of last March, just before it was forced by the Covid-19 shock to ground most of its fleet.