Shares in budget airline Ryanair (RYA) gained 3.77% to €12.10 after it confirmed it has raised €400 million in a placing to help fund its growth.
New shares in the company were issued to institutional investors at €11.35 each, with the funding helping to strengthen its balance sheet and take advantage of ‘significant growth opportunities’ as rivals ‘shrink, fail or are acquired by government bailed out carriers’.
The move comes as British Airways owner International Airlines Group (IAG) looks for shareholder approval for a €2.75 billion share sale to shore up its finances.
In a statement, Ryanair said the current environment in the aviation sector is likely to result in ‘long-term impacts’ for airlines and 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.’
It said the €400 million cash injection will help it move quicker to capitalise on opportunities as they arise, as well as ‘significantly de-risk’ its debt repayments over the next 12 months, underpinning its BBB investment grade rating which it added could potentially lead to finance cost savings.
Subject to market conditions, Ryanair also said it expects to access the bond markets in due course, adding that the ‘enhanced liquidity as a result of the placing will likely optimise that issuance.’
Post Covid-19 growth opportunities include gaining market share from peers retrenching, further European airline failures and competitive unit cost advantage over other carriers, Ryanair added.
The placing comes after Ryanair revealed its latest traffic figures for August yesterday, which showed it carried 53% fewer passengers in August compared to the same month in 2019, as the coronavirus crisis continued to hurt travel markets. July and August in particular are key months for airlines when demand is typically at its highest.
Passenger volumes for the month dropped to seven million, down from 14.9 million in August 2019, with a passenger load factor of 73%. The company said it had operated about 60% of its normal August schedule.
