It's very simple. Ryanair has reached saturation point at the cheap end of the market (witness aeroplanes being now put into previously untouched "rip-off" airports). Now costs will rise while simultaneously competitors are reducing costs (and fares) all the time (they have the scope to do so, ryanairs costs can only increase).
Thus the differential is closed. Combine this with the end of 1p fare gimmicks and suddenly ryr doesn't look too cheap vis-a-vis the competition.
And if ryr can't compete on price they have nothing else.
The bottom end of the market is hoovered up, now ryr need the more discerning customer, which they won't get. Hence growth will slow down, it has already with aeroplanes parked up and sold. The load factor is much lower than claimed (unlike everyone else ryr count bookings not actual pax on seats when calculating the LF. No show's on gimmick tickets are very high so the actual LF is around 5-10% lower than reported). This winter I've seen several sectors with less than 20 pax.
Now fuel cost is way up and the ryr model looks less well equipped to deal with it than many others.
Next is that the cheap aeroplane deal will run out, ending the aircraft trading business (far and away the most profitable part of ryr).
What's left will be an airline operation which only returned 7% margin when fuel was $50 a barrel and the opposition was fatter. Throw in $100 oil and leaner opposition and the model will be in meltdown.
It's for good reason mad mick has sold most of his shares. He sees the writing on the wall in time. Pity the rest that don't.
You can talk all you like about money in the bank, but it disregards a fundamental fact of investing: a business either has to produce a superior return on equity than available elsewhere or else it has to pay dividends. A loss (or poor profits) is a return on equity that the investors won't tolerate so all that money will be demanded in dividends. It certainly is not available for cushioning an extended period of loss making.
frfly, you hypothesis doesn't hold water if the ryr model is fundamentally unable to cope with high oil prices and competition that has a competitive cost base. The model is showing all the signs of being unable to do so (not only my opinion, but that of investment banks such as Deutsche Bank). Micko may not have forgotten to hedge but he did wake up and go "$hit I made utterly the wrong call on hedging and built a model that can't fu*k1n deal with high oil prices." Obviously this was said in private as he doesn't admit mistakes - a trait every investor should run from, you lie in public and you eventually lie in private. The history of business is littered with so-called "very clever businessmen" who were exposed as charlatans when the going got tough.
Tooloose, ain't that the truth about Laura Noonan