Ryanair Holdings plc (RYAAY - Free Report) recently announced that it would reduce its October capacity by a further 20% due to coronavirus-related travel restrictions by European Union governments. The airline stated that these travel restrictions, often introduced at short notices, were affecting forward bookings.
In mid-August, the carrier had already announced plans to slash its October capacity by 20% due to a drop in bookings following a surge in coronavirus cases in some European Union countries. Back then too, fresh travel restrictions had “notably weakened” Ryanair’s forward bookings.
With the additional capacity reductions, the Irish low-cost airline now expects its October capacity to decrease from 50% to approximately 40% of October 2019 levels. Even at this reduced schedule, the airline anticipates to maintain a load factor (percentage of seats filled with passengers) of more than 70% in October.
Ryanair further warned that “if current trends and EU Governments’ mismanagement of the return of air travel and normal economic activity continue,” then there might be similar capacity cuts in its winter schedule (November-March).
With coronavirus concerns continuing unabated, the airline is seeing significantly weak travel demand. In its recently released August traffic statistics, the carrier reported a 53% year-over-year plunge in traffic to merely 7 million guests. Ryanair operated approximately 60% of the normal August schedule with a load factor of 73%. On a rolling-annual basis, total traffic at Ryanair (including the LaudaMotion unit) declined 40% to 88.9 million.
Zacks Rank & Key Picks
Ryanair carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Transportation sector are Canadian Pacific Railway Limited (CP - Free Report) , Landstar System Inc (LSTR - Free Report) and Knight-Swift Transportation Holdings Inc (KNX - Free Report) . While Canadian Pacific carries a Zacks Rank #2 (Buy), Landstar and Knight-Swift sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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