Despite warning of a record full-year loss Ryanair (RYA) fell just 1.3% to €14.02 on Monday, with investors apparently focusing on its strong financial position and hopes of market share gains in a recovery.

The low-cost carrier swung to a deep third-quarter loss as the pandemic continued to hammer global travel markets.

Net losses for the three months through December amounted to €306 million, compared to a profit of €88 million year-on-year.

Revenue slumped 82% to €1.91 billion, as customer numbers plunged 78% to 35.9 million.

Ryanair said its balance sheet ‘remains one of the strongest in the industry’, with a BBB credit rating and €3.5 billion cash at 31 December.

Looking forward, it said it was ‘cautiously guiding’ for a full-year loss of between €850 million and €950 million, citing uncertainty around travel restrictions and vaccine rollouts.

UK investors are currently prevented from buying (but not holding) shares in Ryanair as we explain in this article.

TRAFFIC GUIDANCE CUT

Full-year traffic was expected at between 26 million and 30 million, down from previously guidance of ‘up to 35 million’, with more risk to the lower end of the range.

Beyond the pandemic, Ryanair said it expected to have a much lower cost base and a strong balance sheet, allowing it to fund lower fares and add lower cost aircraft.

AJ Bell investment director Russ Mould commented: ‘It says something about the market’s willingness to look through the pandemic and just how low current expectations for the airline sector are pitched that a forecast record annual loss from Ryanair is being treated so calmly.

‘This isn’t just a small beat of the previous record either, this is the sort of record breaking even Usain Bolt would envy – with the guidance implying a five times larger loss than the previous worst in 2009.

‘One reason Ryanair is being given the benefit of the doubt is its large cash balance, low costs, avoidance of the long-haul market and the fact it doesn’t offer business class. Business travel looks unlikely to recover rapidly.

‘This could put Ryanair in a strong position relative to its rivals and allow it to take market share coming out of the Covid crisis.’

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Issue Date: 01 Feb 2021