Ryanair surprised the market last week when it predicted a 5 percent rise in fares over the next year, putting the airline at breakeven, even with oil at $130 and minimal hedging. Analysts had previously been penciling in a fall in fares over the year, plunging the airline into an operating loss for the first time in its history.
Rival Irish airline Aer Lingus last week guided a breakeven result for 2008 assuming an oil price in the 'mid-$120s' even though oil continues to hover stubbornly at the $135 mark.
However, NCB's Neil Glynn said: 'We feel that current airline revenue guidance may prove overly optimistic, and see the risk of profit warnings as we enter the winter season. Our view [is] that the airline sector may see significant revenue weakness this winter.'
NCB 'seeks risk' on Ryanair's guidance and speculating on a profit warning as early as first quarter results, in late July. However, a weak 2009 will be a 'blip year' for Ryanair, with recovery likely once the market restructures and capacity is constrained.
British Airways has the 'highest short term risk profile' because of its 'reliance on premium traffic growth,' according to NCB. |
