There have been a lot of sectors affected by the Brexit vote, none more so than the banking and housebuilders sectors. However, the airline industry has also taken somewhat of a battering and, in particular, the low-cost budget airlines EasyJet and Ryanair. Michael O’Leary, CEO of Ryanair, was championing a “remain” vote as the majority of their routes are within Europe. Their shares have tumbled a staggering 20% since the close on Thursday. With so much uncertainty, volatility, and the threat of recession down the road, it wouldn’t be a great surprise to see the stock fall further.
However, O’Leary’s response has been rapid. He’s announced that future growth will be diverted to the EU, away from the UK, and fares will be discounted to “fill planes”. With apparently 2 years left before the UK officially leaves the EU, you could also get a flurry of travellers wanting to take advantage of their EU passport, which could also boost demand in the short term. So whilst the outlook is still very gloomy, it may not be as bad as the markets are starting to price in. It’s definitely a stock to keep an eye on over the next 6 months. The stock currently trades at €10.83.
Vinay Sharma, Senior Trader
The views and content expressed above are the views of the author and do not reflect the views of ayondo markets. This service is for information only and should not be interpreted as investment advice or any recommendation to enter into a financial transaction.