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Speculation has been mounting that further interest rate cuts will be announced by the Bank of England, after minutes from its previous meeting on cuts were released. They reveal that the Bank's n...
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Monday 28th July 2008
News that budget airline Ryanair has posted a loss of some Euro90 million for the first quarter has seen the shares marked down over 20% this morning. The group has also advised the market that a loss for the full year is probable if the price of oil remains anywhere near recent highs. While the full year loss may be in the region of Euro60 million this is still a major shock to the City
The company is now in a very tricky situation, needing to attract customers by reducing prices (5% on average) yet having to ensure the group does not fall too far into debt. A number of airlines around the world have hedged their fuel costs for the foreseeable future but Ryanair has seen fit to leave itself open to market moves. This may well work in the groups favour if the price of oil falls – as many expect – but it also leaves open a serious risk of further cost rises which the company has indicated they will not pass on to customers.
Today’s news has caused major concern across the sector and seen many other operators marked down in sympathy. The next few months will be tough and full year results will depend heavily upon the price of oil. |
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