Ryanair PLC’s (LON:RYA) increasing market can trigger a surge in profits over the medium-term for the low-cost airline, predicts Credit Suisse.
The Swiss bank expects Ryanair’s market share in Europe will rise towards 25% by the mid-late decade, which will mean two things: The need to discount will fall helping it to push up its average fare in 2020 of €37.
Also, if Ryanair is carrying is one in every four passengers in the European short-haul market, Credit Suisse believes there is huge potential for the airline to partner with third parties such as retailers and to exploit its brand loyalty.
“Loyalty plan values can structurally boost liquidity now – equity values later but RYA could do this in a “low cost” manner.
“With each 1% gain in revenue per pax [passenger] worth 8% to FY20A profit, sensitivities are compelling,” the broker says.
Target price for the shares is €17.91 against a market price today of €17.11, up 2.8%.