Ryanair Plans To Drop London Listing; Slams Boeing In 737 Jet Price Row
Ryanair is planning to delist from the London Stock Exchange in coming months due to a fall in trading volumes there, executives said this week, dealing another blow to London's status as a global financial center after Brexit.
The Irish airline's move comes after its British shareholders' voting rights were restricted post-Brexit and follows miner BHP saying in August it would do away with its dual-listed structure and make Sydney its main listing.
"I think we will probably delist sometime in the next six months," Ryanair CEO Michael O'Leary told a conference call.
The LSE had no immediate comment.
Brexit had pushed EU stock ownership of the company below 50% - given the UK is no longer part of the bloc - and the "European Commission wants us to be seen to be taking action," O'Leary said.
Ryanair had said in 2020 that UK nationals, like other non-EU nationals, would from January 2021 no longer be permitted to acquire its ordinary shares - a decision taken to ensure the airline remains majority EU-owned and retains full licensing and flight rights in the bloc after Brexit.
Ryanair has a primary listing on Euronext Dublin and its American Depository Receipts (ADRs) are listed on the U.S. Nasdaq. In 2012 it downgraded its listing on the LSE from premium to standard - hitting daily turnover on the LSE with most volume already migrating to European exchanges.
Monthly trading volume in Ryanair's London-listed shares averaged 20.5 million in the 10 months to end-October, down almost 68% from the average turnover in 2020, according to Reuters calculations based on Refinitiv data.
Ryanair trading volumes in Dublin have also fallen this year but to a lesser extent. In the 10 months to end-October monthly volume there averaged 35.5 million, down 44% on 2020.
Another high-profile delisting would come as listings on the LSE have fizzled and its main market has underperformed. European stocks have outperformed the British blue chip index by nearly 9 percentage points this year, according to Refinitiv data.
"Many firms may be looking at the FTSE and the sheer underperformance and the high costs involved in listing here," said a sales trader at a local brokerage.
Having two share trading venues, one each in the UK and EU, is considered expensive and particularly onerous for airlines, whose operating licences to fly between destinations within the bloc are reserved for operators that are majority owned and effectively controlled by EU, EEA or Swiss nationals.
"The migration away from the LSE is consistent with a general trend for trading in shares of EU corporates post Brexit," the airline said in a statement alongside its six-monthly results.
Britain is pushing to keep the City of London as a global financial centre in the aftermath of Brexit, which has largely cut off the UK financial sector from clients in the bloc.
The bulk of trading in euro-denominated shares shifted overnight from London to Amsterdam after Britain fully left the EU on Dec. 31, 2020.
Ryanair Slams Boeing In 737 Jet Price Row
In other Ryanair news, the boss of Ryanair ramped up a war of words with Boeing this week, calling the U.S. planemaker "delusionary" for imposing what he termed a double-digit percentage price hike for 737 MAX 10 jets in talks this year.
Chief Executive Michael O'Leary also said Boeing needed to "get its shit together" after what he described as delays in the delivery of 65 jets from an existing MAX order, though he was "reasonably confident" they would arrive for the summer peak.
A Boeing spokesperson said it was committed to supporting Ryanair as a long-standing partner, but added it would "continue to be disciplined" in commercial decisions.
Industry sources blamed the delays on shipping problems for galleys linked to a worldwide logistics logjam.
Europe's largest low-cost carrier in September abruptly ended talks with the U.S. planemaker over an order of 737 MAX 10 jets worth tens of billions of dollars because of differences over price.
Speaking following the release of the airline's latest financial results, O'Leary said Boeing's approach was "delusionary".
"Boeing out of the blue sought a...substantial double-digit price increase. I don't understand the strategy," he said, before reiterating that Boeing badly needs Ryanair's business. In a call with investors, O'Leary said he was having a "marital tantrum" with Boeing, Ryanair's long-time sole supplier.
O'Leary in September said Ryanair had been in talks to order at least 100 of the 230-seat MAX 10.
Sources say the dispute over MAX 10 was already rumbling when Ryanair ordered 75 more of the smaller MAX 8-200 version in December last year.
Two industry sources said Ryanair had rejected previous lower offers on the MAX 10 since that date.
Asked on an investor call whether the price increase was compared to an earlier offer or compared to prices paid in the past, O'Leary declined to comment.
Insiders say brinkmanship and flared tempers are more common in the cut-throat aerospace industry than executives care to admit, in contrast with the polished 'win-win' arguments favoured whenever such hard-fought deals are announced publicly.
Ryanair and Boeing have often clashed behind the scenes as Europe's pioneering low-cost carrier insisted on the lowest possible prices, echoing fraught negotiations between Airbus and some of its key low-cost customers.
But it is unusual for the knockabout to become public.
The spat partly reflects two sources of abnormal volatility stemming from overlapping crises, industry sources say.
First is uncertainty over the shape of the recovery, with Ryanair and Boeing appearing to bet on different paths.
While O'Leary has said Boeing is ignoring reality about prices, he has also said demand is likely to snap back quickly.
Second is the uncertainty that swirled around valuations for the MAX - once Boeing's most reliable cash and profit benchmark - in the wake of a two-year safety crisis.
The MAX 10 has struggled to keep up with runaway sales of the Airbus A320neo and the industry began the year uncertain how much the market would pay for it. But a deal for United Airlines to order 200 MAX 10 in June encouraged Boeing to set the bar higher, driving up the offer for Ryanair, market sources said.
Consultancy Ascend by Cirium said in September MAX values had increased "very slightly" as inventory declines.
With hundreds of MAX yet to be delivered after the grounding and COVID-19 crisis, sources say Ryanair believes prices should be set lower than previous MAX 10 offers, but the planemaker has drawn a line on the grounds that it would be uneconomic to produce and industry sources say the talks remain deadlocked.
Boeing declined comment on confidential talks. A Ryanair spokesman said it had nothing to add to O'Leary's comments.