Ryanair has placed new ordinary shares and raised approximately €400 million from shareholders to strengthen its balance sheet. The airline shows its determination to use current economic downturn for its own benefit and jump ahead of its competitors.
The air carrier came up with an ambitious plan to boost its balance sheet approximately €400 million. In September 3, 2020, the low-cost carrier decided to increase its equity stake by taking a strategy of new ordinary shares placement (€0.006 per each) in the company’s capital for institutional and other investors.
According to current Nasdaq statistics, Irish low-cost carrier has issued 35,242,291 new ordinary shares at a price of €11.35 per placing share. The shares represent 3.2% of the company’s issued share capital immediately prior to the placing.
While the aviation market is currently affected by pandemic and other airlines are forced to shrink their fleet, ask for state aid or even file for bankruptcy, Ryanair is determined to pick out the competitors. The carrier’s main goal is to use the present economic downturn to occupy a dominant position in the industry.
“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”, in the official document stated the carrier.
Ryanair believes that the net proceeds from the new share placing could help the company to increase its financial flexibility and liquidity as well as significantly shrink the risk of its debt repayments over the next 12 months.
In addition, the airline has not lost hope to upgrade its fleet with the new Boeing 737 MAX 200. This special variant of MAX is based on the 737 MAX 8 and Boeing has developed it in response to the prior forecasts of the fast low-cost sector growth. In 2014, Ryanair made a commitment to purchase 100 aircraft of this type.
After the Boeing 737 MAX was grounded worldwide following two deadly crashes, Ryanair’s deliveries were postponed multiple times. Now, the low cost airline anticipates receiving up to 40 737 MAX 200s by the summer 2021.