The no-frills airline Ryanair (LSE: RYA) made an announcement on Friday that could have implications for owners of Ryanair shares.
Ryanair shares will be delisted in London
The company announced that it is delisting its shares from the London stock exchange. That means that people will no longer be able to buy and sell Ryanair shares on the London market after the delisting date. So the last trading day on which Ryanair shares can be traded on the London market will be 17 December.
The company explained the move in the following terms: “the volume of trading of the Shares on the London Stock Exchange does not justify the costs related to such listing and admission to trading, and so as to consolidate trading liquidity to one regulated market for the benefit of all shareholders.“
This was something which the company had signalled was an option over the course of some time. So it will not come as a surprise to investors. The statement refers to the cost of the London listing and Ryanair is known for watching every penny. But that is not the only reason this move makes sense. There are EU rules on the percentage of non-EU ownership airlines can have. The UK has now left the EU but Ryanair remains a popular holding among UK investors. Delisting in London may further nudge some UK shareholders to sell their holdings. That could help Ryanair stay in line with the European rules on foreign ownership.
Dublin will continue as Ryanair’s primary listing
Ryanair is an Irish airline originally, although like many large companies it now has a complicated corporate structure spanning multiple jurisdictions. Its primary listing is on the Dublin stock exchange. That will not change after it delists in London — Ryanair will continue to be traded in Dublin.
UK shareholders who want to buy or sell Ryanair shares will be able to do so on the Dublin market, subject to any restrictions they face on overseas dealing. But that does not mean that there is no effective change for UK investors compared to the company maintaining a London listing. Overseas dealing fees may apply depending on one’s trading terms and conditions. There may also be different tax implications for some investors compared to trading on the London exchange.
Will this impact the Ryanair share price?
The argument for an Irish company like Ryanair listing on a larger stock exchange such as London rather than staying on its home turf is access to capital. Over the years, the Ryanair story has become more prominent across Europe. I think the company can attract all the share capital it needs in Dublin these days. Ending the UK listing will also cut some costs for the company.
So I see the move as mildly positive for the company’s finances. I don’t expect it to have a big impact one way or the other on the Ryanair share price, though. So it won’t affect my thinking on whether to add Ryanair to my portfolio. I expect the Ryanair share price to continue to be driven more by its business results and investor expectations around aviation recovery, rather than its listing site.