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Fitch rates Ryanair BBB+, outlook stable

Friday, May 16 17:17:35

Fitch Ratings has assigned Ryanair Holdings a 'BBB+' Long-term Issuer Default Rating (IDR) with a Stable outlook.

Ryanair's low cost advantage and substantial liquidity are key drivers of the rating, it said.

"The company's high margins, significant cash generation, and financial flexibility further differentiate RYA from most airline peers. RYA's solid capacity for meeting its financial commitments is also supported by the company's relatively flexible cost structure, low break-even load factor, and robust hedging programmes for fuel and currencies. RYA has delivered strong financial results for the past three years despite a lacklustre demand environment and relatively high fuel costs, and Fitch expects the company's results to continue to show strength while it begins taking delivery of new aircraft over the next five years. The company's low fleet age, fleet commonality and other elements of it business model also support the ratings. RYA's financial metrics are generally strong for the rating, with the exception of gross leverage, but this is offset by low net leverage metrics driven by the company's large cash position," it said.

"Overall, Ryanair's conservative and simplified business model tempers the impact of the financial leverage and operating leverage that are characteristic of the airline industry. The business model is designed not just to achieve industry-low costs but also to mitigate some of the key risks in the sector. The company's financial strength, including strong cash liquidity, is a key element of this low-cost/reduced-risk strategy. RYA's leading cost position, liquidity, high margins and significant cash generation give it the ability to withstand the inevitable shocks that periodically hit the airline industry, as well as fending off competitive threats."

Reacting to the rating, Ryanair today said: "We are pleased with the Fitch rating of BBB+, our second in as many months, following Standard and Poor's BBB+ rating, which makes Ryanair the highest rated airline in the world and reflects the financial strength of Ryanair's business model."

"The successful achievement of these BBB+ ratings is part of our plan to access capital markets for low cost finance to purchase our 180 new Boeing 737-800 aircraft. These BBB+ ratings will enable Ryanair to achieve lower cost financing to ensure that we continue to have the lowest costs and offer the lowest fares in Europe for our customers.