Davy expects more casualties in aviation as it reduces price target for Ryanair shares to €14 from €18

Stephen Furlong of Davys

Davy stockbrokers predicted more casualties in aviation this autumn as it reduced its price target for Ryanair shares to €14 from €18.

Davy, Ryanair’s stockbrokers, echoed Ryanair’s analysis that the airline will take advantage of difficulties created for rivals by rising fuel prices and regulatory and capacity problems and continued to rate the Ryanair stock at  outperform. Ryanair shares fell 30pc since the airline ran into rostering difficulties and trade union disputes but have risen 13pc from recent lows. Ryanair revised its full-year profit guidance downwards by 12pc ot between €1.1bn and €1.2bn, while passenger number tally for the financial year to March will be 138m rather than 139m.

Davy said in a written statement: “With a historical lag of 12-15 months, we should see capacity growth slowing as hedges roll off and fuel prices hurt the sector – all the other airlines in the sector have lower margins than Ryanair. We have only started to see market capacity cuts, but these will accelerate. Europe’s niche airlines have had a difficult summer, Primera Air, Small Planet, VLM, Azur Air Germany and SkyWork have all ceased operations. We expect more casualties from rising fuel prices and overcapacity unless there is consolidation.”