Ryanair Holdings (RYAAY - Free Report) posted impressive December 2019 traffic figures, primarily owing to solid air-travel demand. Traffic (including 0.5 million from its LaudaMotion unit in Austria) was up 9% year over year to 11.2 million in the month.
However, load factor (% of seats filled with passengers) remained unaltered at 95%. This European low-cost carrier’s passenger growth, excluding traffic from LaudaMotion unit, was 7% in the month. On a rolling annual basis, total traffic increased 9% to 152.4 million.
In fact, robust growth in passenger traffic has been hugely responsible for Ryanair’s shares having an impressive run on the bourses lately. In the past six months, shares of this Irish carrier have gained in excess of 32% compared with its industry’s mere 1% growth.
The impressive traffic report is a further positive for this Zacks Rank #1 (Strong Buy) stock. You can see the complete list of today’s Zacks #1 Rank stocks here.
Despite the impressive stock-price movement backed by strong demand for air travel, Ryanair is not bereft of headwinds. Notably, the company has been suffering due to the prolonged grounding of Boeing 737 MAX jets. In fact, these planes have been grounded since March 2019 following the twin air crashes in different parts of the world, over a span of five months, apparently due to software malfunctioning.
These woes are unlikely to be resolved any time soon as can be made out from the commentary of Ryanair CEO Michael O'Leary. According to a Reuters report, O'Leary has noted that Ryanair is unlikely to receive its first 737 MAX delivery from Boeing before this October.
In fact, delivery delays are pushing up non-fuel costs, thereby hurting Ryanair’s bottom line. Evidently, non-fuel unit costs are projected to flare up 2% in fiscal 2020 (ending Mar 31, 2020), primarily due to delivery delays of the Boeing 737 MAX planes.
Ryanair is not the only carrier to be suffering due to the grounding of Boeing 737 MAX jets. Its U.S. counterparts — Southwest Airlines (LUV - Free Report) , American Airlines (AAL - Free Report) and United Airlines (UAL - Free Report) — have been equally affected by the issue. With no clarity available as to when the jets would resume flying, American Airlines, Southwest Airlines and United Airlines currently expect the Boeing 737 MAX jets in their respective fleets to remain grounded through Apr 7, Apr 13, and Jun 4, 2020, respectively.
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