Shares in Ryanair fell sharply on Thursday, after British aviation authorities scalded the airline for its handling of a massive staffing crisis, and demanded “action, not words”.
Around midday on Thursday, shares in Europe’s largest low-cost airline were trading about 2 per cent lower on the day.
“It’s not just customers who are in for a rough ride - investors in Ryanair should probably expect turbulence ahead as earnings are likely to be hit by higher costs and slower growth,” said Neil Wilson, senior market analyst at ETX Capital in London.
Since last week, Ryanair has more than doubled its cancellations, affecting more than 700,000 passengers between now and next March.
On Wednesday, the Civil Aviation Authority accused the Irish carrier of providing “misleading information” after it offered customers refunds or alternative Ryanair flights.
On Thursday, Ryanair said in a statement that it would be meeting with the CAA and “will comply fully with whatever requirements they ask us to”.
“Cost pressures are building, specifically staffing costs, and this threatens to eat into Ryanair’s big strategic advantage,” said Mr Wilson.
But he also said that, while Ryanair’s “reputation has clearly suffered a huge blow”, its probably “not terminal”.
“In a highly commoditised sector the only thing that really counts for most customers is price and availability,” he said. “It’s never gone after business passengers. By the end of all Ryanair will probably still be the cheapest and leanest operator, but turbulence should still be expected until this shakes out.”
