Cancellation fiasco and EU court woes wipe €2bn off Ryanair value

Ryanair has lost as much as €2.1 billion of its market value since the middle of last week, as the carrier's move to scrap thousands thousands of flights over the next six weeks added to the impact of news on Thursday of a potentially costly European court ruling.

Shares in the low-cost airline fell as much as 4.8 per cent on Monday to €16.25, their lowest level since May, bringing its losses since markets closed on Wednesday to 9.9 per cent. Its market value has fallen from €21.4 billion to €19.3 billion.

Ryanair moved on Friday to say it will operate a programme of flight cancellations over the next six weeks because of pilot shortage difficulties. The disruptions to its flights schedule will affect thousands of travellers, including some who are abroad and are expecting to return home with the airline.

Lack of clarity over precisely which flights are affected risks undermining sales over the six-week period.

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The Commission for Aviation Regulation is meeting Monday to discuss Ryanair’s decision.

Goodbody Stockbrokers analyst Mark Simpson said that the cancellations will likely see 2.3 per cent, or €34.5 million, being shaved off his €1.479 billion full-year net profit forecast for the carrier.

The development came a day after the European Court of Justice (ECJ) ruling that the airline’s crew members may be able to bring industrial relations disputes before courts in the countries in which they are based. Ryanair’s long-standing position has been that crew are employed under Irish law and any contract disputes fall under this jurisdiction.

Although Ryanair has said that the ECJ ruling will not increase the company's costs, Merrion Capital analyst Darren McKinley has estimated it could cost as much as €40 million next year, rising to €100 million in 2019.

The flight cancellations “coupled with the noise surrounding last week’s ECJ ruling are unwelcome for the airline and likely to weigh on the share price,” Mr Simpson wrote in a note to clients before trading got underway in Dublin.