Shares of discount European airliner Ryanair Holdings (NASDAQ: RYAAY) (LSE: RYA) shed 16.5% of their value on Monday, hurt by rising fuel costs and a damaging strike among employees in Belgium, Germany, Holland, Portugal, and Spain -- and the earnings warning that resulted from these events.
Continue Reading Below
Ryanair pilots in Germany, and Ryanair cabin workers elsewhere in Europe, called a one-day strike on Friday that disrupted the travel plans of more than 40,000 flyers and forced Ryanair to cancel some 250 flights.
A secondary consequence of the strikes was that Ryanair also had to roll back its forecast for this year's "fiscal 2019" earnings. In an update issued today, the airline warned that full-year profit will probably land somewhere between 1.1 billion and 1.2 billion euros, or about 12% below the previous prediction of 1.3 billion euros. Should this prediction come to pass, it will also represent about a 20% decline in profits from last year's 1.45 billion-euro record haul.
And even that may not be the worst news. Ryanair told Reuters it " [can] not rule out further disruption," which could impact results and cause earnings to fall even more this year.
On top of that, rising oil prices -- a factor out of Ryanair's control -- are expected to reduce Ryanair's profits next year as well. Next year is fiscal 2020 for the Irish airline, and profits could fall by 3.5% for every 1% rise in the cost of jet fuel, according to London-based Goodbody Stockbrokers.
Little wonder investors are heading for the exits.
10 stocks we like better than Ryanair HoldingsWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Ryanair Holdings wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of August 6, 2018