This is what I (aerospace) said in... January:
"it shows that the company is currently in a bad shape and quiet "vulnerable" with all their new crap bases (MAD, MRS, BRE, BHD, BOH)"
or in May:
"Poor new bases + lower LF + higher fuel cost not hedged = bad performances. I think their 2008 results will be not as bad as some could expect, but 2009 will be very very difficult"
Few guys replied that I didn't know of what i was talking about, it was non sense etc
Well, if shareholders believed me, they would have saved a lots of money!!
About BOH, I was saying that a double daily service on this route was non sense and I still remember a guy that told me that PIKBOH was an excelent route, where they were doing a lots of money with usual prices at 200 GBP ow! lol
For next week-end, which is one of the busiest of the year, so very expansive, prices from fridays evening to sunday evening (usually most expansive flights), are 9.99 GBP both ways without taxes, 70 GBP return all exclusive
On current situation, I agree with some posts such as Eu01 or StygerTim (i didn't know the PFP segment!) and just would like to add few points:
- all the promos confirm what I said few months ago: contrary to what they said in their AR FY07, their new bases such as BOH (non sense), BRE (disaster), VLC (suspended!), ALC or BHD (loosing millions of €) are terrible
- their decisions related to hedge is unbelievable! When fuel prices hugely increased, they said that they don't think it will go above 100$ and didn't hedge anything, whereas it reached 145$!!! Few weeks ago they said they expect the price to drop, but in the same time hedge 90% of their fuel at 129$ whereas current price is now below!
They are always "playing" against the trend (if prices goes up, they don't hedge, if price goes down, they hedge), this is a very risky tactic isn't it?
Hedging is a question of risk management, but Ryanair over the past weeks only increased the risk of loosing money!
- they have zero strategic view: one day they will increase fare by 5%, 5 days later they will reduce it of...5%. One day they create a base in VLC, few months later they suspend all their operations at the same airport etc
- their Aer Lingus strategy is non sense: youou MOL, you are
not allowed to merge with Aer Lingus, did you get the info??? That's a fact: the merge is prohibited by the european commision, so why continuing to buy shares??? Now that they reach the maximum of share they could buy, what's next? That's a very curious (stupid) situation: Ryanair and Aer Lingus are very fierce competitor. Every decisions of one could damage the other. So when Ryanair opend a base at BHD, obviously Aer Lingus performance at BEL is worst than expected, and so obviously Ryanair loose money as the share value of AL is diluting. Ryanair investment is a big paradoxal financial burden for Ryanair and a 100% "
loose-loose situation"...
- their war with easyJet is non sense: Ryanair since few years invaded the uk and start a price war on many airports where they were in competition with EZY. Last one was EDI, and more and more head to head routes exist. This is silly as the GB is probably the most competitive market in europe currently, and very under pressure witht he economic dowturn. Btw, it appears to me that they even losting many battle against EZY, for example at BSL or STN where they suspended many flights...
- they are loosing plenty of people (in communication, marketing, yield etc). Ryanair experiments a huge turnover and it's not good for its performance. They lost plenty of marketing directors as they obliged them to swith their locations from STN to DUB, lost also the head of communication, of marketing, of scheduled revenue (this is actually the only good news for them) etc I would say that 80% of HQ people are not happy to work for Ryanair. Even more when they see their shares dropping...
I could talked also about their rubbish yield management (cheapest fares available one month before departure), the rubbish website, their rubbish customer service etc etc
Two little reflexions to conclude:
- who will suffer the most in current crisis? nobody knows, but I thing Ryanair will suffer a lot! I don't think lots of busines travellers will switch from majors to Ryanair, because of the obvious reasons that ryanair have very few business routes (a part from their DUB-UK services). At the end, they would lost plenty of leisure travellers and will win very few busines travellers. On the other side, I believe easyJet will be the biggest winner, as THEY serve main airports and yes, they will loose some leisure travellers as well, but it will be a lots compensated by the gain of business travellers on their key markets such as LON, ORY, GVA, MXP, SXF etc
This is by the way confirmed by their latest release: Ryanair saw a drop of LF (leisure) and of yield (no extra business) whereas easyJet experiences flat LF (loose of leisure compensate by busines) and an increase of their yield (more business travellers). Currently, easyJet is winning the war...
If you tell me that Ryanair get stronger during the past crisis such as 09/11, I think environments are completely different. The biggest difference is that majors are now a lot more competitive in terms of prices. Aer lingus or BA now offer very good deals. If in 2001, business man swithched from Aer lingus to Ryanair, I don't think that would be the case this year because aer lingus could be very cheap as well.
- I saw a sentence before such as "they don't have stupid people at Ryanair". I have the opposite opinion, even if it could look a bit arrogant.
Everybody working at Ryanair HQ will tell you that they are managed by ignorant guys. They have been succesful by copying an existing model, by benefiting of ideal conditions (deregulations, explosion of tourism etc), by exploiting economically the weakest players (ie. small airports and employees) and by receiving plenty of subsidies (whereas they present theirselves as the champions of liberalism...). There is nothing genious in that...
In current situation, where they have to use their brains for the first time, they are not capable to do so and goes from errors to errors. They only panicate and push pressure but finally upset airports (FUE, KRK, BSL, french ones etc). Hard to forecast when and how they will recover, if they will...