Interesting article, Algy.
This is the best thing in it, though.
My congratulations to your Jasper the illustrator, Algy, and a big BZ to the art department from me. Excellent!
Meanwhile, nothing succeeds like success, eh Rat? This from
tomorrow's Lex column in the FT.
The overweening self-confidence of Ryanair's chief executive provokes a desire to prick it.
This is difficult to do, though, when Michael O'Leary continues to present such solid evidence of good performance. The Irish low-cost carrier increased passengers and revenue more than expected in the year to 31 March. Net income rose 12 per cent and unit costs rose only 5 per cent despite a 74 per cent increase in fuel costs over the year. The money Ryanair earns from providing extras like car hire or hotel bookings continues to grow as a proportion of total revenues, and contributed strongly to a 2 per cent increase in revenue per passenger. Given this, Mr O'Leary's boast that Ryanair will this year overtake Lufthansa as the world's largest international scheduled carrier is not as hubristic as it sounds. There are still valid questions to ask about Ryanair's future performance. It is adding capacity at breakneck pace. And although Mr O'Leary says cutting costs is like peeling an onion – once one layer is uncovered, another layer reveals itself – unit costs other than fuel cannot stay on a downward path indefinitely.
Despite all the good news, Ryanair shares are currently stuck where they were three years ago and, on forward price to earnings, trade on a 20 per cent discount to low-cost rivals like Easyjet and Southwest. So the most pressing question for shareholders is what Ryanair will decide to do with its cash pile,
now approaching €2bn. Mr O'Leary says, with some justification, that he believes airlines rarely make money from acquisitions, so it is unlikely to be squandered. Shareholders hoping for a juicy special dividend have good reason to expect that Ryanair's success will soon flow over to them.