The Motley Fool

The Ryanair share price has tumbled. Is this a once-in-a-lifetime opportunity to buy?

Shares in budget airline Ryanair (LSE: RYA) tumbled in early trading this morning. Markets responded to an awful set of quarterly numbers from the company and the government’s decision to reintroduce a 14-day quarantine on travellers coming back from Spain

Is this a once-in-a-lifetime opportunity to grab shares in this and other battered airlines on the cheap? Or should Foolish investors steer clear? For now, I think the latter. 

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Ryanair dives

We knew the figures wouldn’t be pretty but it would seem many in the market are shocked at just how bad they are. 

Today, Ryanair reported a Q1 loss of €185m. Contrast this with the €243m net profit achieved over the same period last year and you get an inkling of just how hard the coronavirus has hit the FTSE 250 stock and its peers. Indeed, the company reflected that the three months to June has been “the most challenging” in its 35-year history. 

No hyperbole here. As a result of lockdowns and travel bans, the number of passengers flying with the company between mid-March and the end of June dived to just 500,000. In the previous year, it was 41.9m. And while Ryanair was able to reduce costs by 85% over the period, this wasn’t enough to offset the 95% dive in revenue to €125m.

As company updates go, you’d struggle to find one as bleak as this. Perhaps the only chink of light was that Ryanair expects to have operated roughly 40% of its normal schedule in July. This will rise to 60% or so in August and “hopefully” 70% in September. It also expects to clear 90% of customer refunds relating to cancelled flights by the end of July. 

Murky outlook

Ryanair’s shares were down 7% this morning. As bad as this may sound for holders, it wasn’t as awful as the falls sustained by listed peers easyJet and Jet2 owner Dart Group. As I type, their share prices have both tumbled 13%.

Since the outlook for Ryanair and, indeed, all airlines is so uncertain, I’m not expecting things to bounce back soon. As the former reflected today, it’s “impossible” to know for how long the coronavirus will be with us and whether a second wave may coincide with the arrival of the annual flu season.

Although it predicts a smaller loss in Q2, Ryanair went on to say it couldn’t provide any guidance on full-year earnings. It did, however, forecast that traffic would drop 60% to just 60m people and that the need for airlines to cut capacity would impact air travel for “at least the next 2 or 3 years.

Still too risky

Based on today’s news and market reaction, I’ll continue to steer well clear of airlines for a while. The risk/reward payoff simply isn’t worth the trouble in my opinion, even if some UK listed airlines (such as Ryanair) possess relatively solid balance sheets. The Dublin-based business may emerge stronger by growing its network and fleet. But the suggestion it’ll suddenly race ahead of competitors benefitting from financial aid packages from governments is optimistic. 

If negotiating the coronavirus wasn’t bad enough, airlines must also contend with the elephant in the room that’s Brexit. A no-deal scenario could mean even more turbulence for the already-battered industry.

A once-in-a-lifetime opportunity? Not as I see it.

This is not to say that aren't great shares worth buying in the market today.

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Growth Share… free of charge!

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.