Broker slashes Ryanair earnings forecast
24.07.08
Merrill Lynch yesterday slashed their Ryanair earnings forecasts after saying that ‘intra-European’ air travel as the most price-sensitive sector of the aviation market.
The broker now expects Ryanair to return EBIT (earnings before interest and taxes) earnings of €108m for the 2009 full-year, down from a previous estimate of €232.5m. Its earnings per share (EPS) guidance for Ryanair has also been slashed, from 11 cents to 3 cents.
The broker said the changes were made after it revised its traffic growth expectations for Ryanair from 15% to 13.5%. This follows Ryanair's announcement last week of plans to ground 20 planes during the winter months and temporarily halt services to seven European airports.
Merrill has also increased their fuel-cost assumption for Ryanair by 15% amid soaring oil prices, and raised their expectations on fare increases from 3% to 5.5% as the airline cuts services and weaker routes.
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