Ryanair news puts pressure on airline share prices
A poor set of numbers from budget airline Ryanair landed this morning, and this has sent the company’s share price into a downward spin, along with its rivals easyJet and IAG.
Ryanair share price slumps – what happened?
Ryanair, Europe's largest airline, has reported a significant decline in profits for the April to June quarter, with earnings falling by 46% to €360 million despite a 10% increase in passenger numbers. The company warned that summer fares would be "materially lower" than the previous year, leading to a sharp drop in its share price and affecting other airline stocks.
The decline in average fare costs and the impact of a Microsoft IT outage on flight cancellations further contributed to the challenging financial landscape.
While Ryanair expects strong demand and increased passenger numbers for the summer, the company anticipates softer pricing and lower fares for the July to September quarter. The airline also highlighted issues with air traffic control capacity, citing factors such as strikes and extreme weather conditions.
Chief Executive Officer (CEO) Michael O'Leary emphasised the urgent need for reform in Europe's air traffic control services to address these operational challenges.
UK airline stocks drop
The news has meant that UK-listed airlines have come under pressure, with easyJet, Wizz Air and British Airways' owner International Consolidated Airlines (IAG) all falling due to the read-across from the Ryanair situation. Investors are concerned that these airlines will suffer similar troubles to Ryanair.
Ryanair share price – technical analysis
Having gained 116% from the October 2022 low until March’s high at €21.79, the stock has now slumped dramatically. The late June rebound fizzled out at €17.50, creating a fresh lower high, and failing to move above the declining 50-day simple moving average (SMA).
Today’s drop took the price briefly through the October 2023 low at €13.96, though it has recovered as the session went on. A close below this and then below the November 2022 high/March 2023 low at €13.62 would bolster the bearish view.
Ryanair chart
easyJet share price – technical analysis
easyJet’s shares could not remain immune from the news, and the shares fell over 8% in morning trading, to their lowest level since November 2023.
Like Ryanair, the share price established a lower high in the first half of July, and has since dropped sharply. Crucially for trend followers, the 50-day SMA has now crossed back below the 200-day SMA, arguing for a bearish view in the medium term.
Further declines target the September 2023 lows around 406p, while below this looms the October 2023 low at 348p. In the short-term, a close back above 442p might suggest the price has stabilised in the short-term.
easyJet share price chart
International Consolidated Airlines (IAG)
IAG’s share price did fall on the news today, but the declines were more limited, given IAG derives significant revenues from business travel.
However, the share price is testing rising trendline support from the March lows, which had held firm in June.
The next targets are the late June low at 160p, followed up by the 200-day SMA at 159p, and then the April low at 157p. Buyers will want to see a recovery back above trendline support, to indicate that a low has formed in the short-term.
IAG share price chart
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