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Ryanair flies higher after Deutsche Bank changes its mind

The transport team at Deutsche went to ‘buy’ from ‘hold’ on stock in the no-frills Irish giant

ryanair planes lined up at an airport
'Added extras' could become just as important to Ryanair's bottom line as ticket sales, says Deutsche

The budget airline Ryanair (LON:RYA) was flying a little higher in early trade after an upgrade by a leading brokerage.

The transport team at Deutsche Bank went to ‘buy’ from ‘hold’ on stock in the no-frills Irish giant after it took a look at the ancillary income generated by the business is earning.

Ancillary income is a fancy name for the money made charging for baggage and in-flight snacks.

Deutsche reckons by 2020 Ryanair could be making as much from these ‘added extras’ as it is currently earning today from ticket sales and these other items combined.

“We think if cultivated properly, ancillary revenues are more sticky and stable than average fares,” the Deutsche note says.

At the same time the profit margins on these items and services is high. “It is a struggle to get below 65% EBIT margin,” the broker adds.

At 9.40am, the shares were changing hands for €14.32, up 1% on the day. Deutsche reckons the stock is worth €17.60.

Quick facts: Ryanair Holdings plc

Price: 10.2694 EUR

LSE:RYA
Market: LSE
Market Cap: €11.19 billion
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