Ryanair has raised €400m from shareholders to strengthen its balance sheet as it eyes potential market opportunities in the wake of the Covid-19 pandemic, Europe's largest low-cost carrier said today.
Shares in the company moved higher in Dublin trade today.
The move adds to a large cash pile at an airline that has been less badly affected by the pandemic than many of its rivals due to its relatively low level of debt and lack of exposure to the badly hit long-haul and business-class markets.
Ryanair issued 35,242,291 shares, about 3.2% of its total share capital, at a price of €11.35 per share. That represents a discount of roughly 2.6% to its closing price yesterday.
The airline said it was raising the funds to capitalise on opportunities created by Covid-19 disruption and to de-risk its debt repayments over the next 12 months.
"As we look beyond the next year, we expect that there will be significant growth opportunities for Ryanair's low-cost model as competitors shrink, fail or are acquired by government bailed out carriers," the airline said.
"The placing will provide Ryanair with greater financial flexibility to capture these opportunities," it added.
Ryanair flew a little less than half as many passengers in August than in the same month last year, but it has one of the strongest balance sheets in the industry with more than €3.9 billion in cash at June 30 and unencumbered Boeing 737 jets worth about €7 billion.
However, it also has €1.9 billion of debt maturing next year, including an €850m Eurobond and £600m raised under the UK's Covid Corporate Financing Facility.
Bernstein analyst Daniel Roeska described the placement as a "small raise for a big company".
"They do not need the cash and the amounts involved are small," Roeska said.
"Insulating against winter chill, defending the BBB rating and getting shareholders to show their support for the group do make sense as reasons, however, given upcoming refinancing needs," he added.
Rival airline group IAG, which owns Aer Lingus and British Airways, in July also announced plans to raise €2.75 billion from shareholders.