Ryanair - 6
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Ryanair costs have been slowly creeping up, whilst many others have been slowly coming down towards a level playing field in addition Ryanair have had (to continue pax growth) move to `normal' airports such as BHX to get growth, but here they face competion and normal airport costs.
I suspect that Ryan air is at or near it zenith, i am told that they now charge CC £1400.00 for course, but at many airports only pay them when they work and many soon get fed up and move on. There are only so many CC wanabes out there that are daft enough to cough up and sooner or later the word gets round.
Ryan have a lot of aircraft coming and if the market for second hand aircraft dips (many analysts think up to 25% of boeing and airbus back order are vunerable) then much of Ryanair business model could unravel, it was only last fall that MOL was shouting that Ryanair would still be profitable at 100 USD a barrel, but remember that assumes volumes remain high and the indications are that the slow down is hitting Ryan harder than Easyjet.
My forcast is that MOL will be gone in a year and a new more customer friendly team will be in,Southwest in the USA do not treat their customer with the sort of contempt that Ryanair pride them selfs on, Remember Gerald Ratner?
If Ryanair has to increase price to maintain profitablity, it will loose its one (and for many) only USP "we are cheap" they have no chance of taking £400m out of the cost base and this last weeks farce over the new booking system will have cost them dear and damage investor confidence that the business can manage major projects, pay peanuts you get monkey's
I suspect that Ryan air is at or near it zenith, i am told that they now charge CC £1400.00 for course, but at many airports only pay them when they work and many soon get fed up and move on. There are only so many CC wanabes out there that are daft enough to cough up and sooner or later the word gets round.
Ryan have a lot of aircraft coming and if the market for second hand aircraft dips (many analysts think up to 25% of boeing and airbus back order are vunerable) then much of Ryanair business model could unravel, it was only last fall that MOL was shouting that Ryanair would still be profitable at 100 USD a barrel, but remember that assumes volumes remain high and the indications are that the slow down is hitting Ryan harder than Easyjet.
My forcast is that MOL will be gone in a year and a new more customer friendly team will be in,Southwest in the USA do not treat their customer with the sort of contempt that Ryanair pride them selfs on, Remember Gerald Ratner?
If Ryanair has to increase price to maintain profitablity, it will loose its one (and for many) only USP "we are cheap" they have no chance of taking £400m out of the cost base and this last weeks farce over the new booking system will have cost them dear and damage investor confidence that the business can manage major projects, pay peanuts you get monkey's
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Of course we are forgetting some fundamental elements here folks, 1. whilst the price of oil is rocketing up-wards the dollar is plummeting thus a near perfect trade off, i wonder if the numbers where done how much more the price of oil in comparison to the euro would actually be. 2. yes there are many new aircraft arriving. last i saw was DYF thats like 6 in two weeks, but again with the dropping dollar the price is only coming down. 3. MOL is a lairing bastard and i would have no doubts that the fuel is well hedge into the future but in his on going attempt to slash cost in an attempt to raise his profits, use the line that ryr is un hedge just to give him yet another reason to hack away at the work force..... April 1 is only days away and i heard not a dicky bird about wage negotiation. however,i would be surprised considering the events of the last 4 years and the efforts that where made to get the pilots to sign up to there deals that they would so quickly go back on them,,, MOL is well aware that the powder is not dry on the pilot dispute situation yet and i would be very surprised if he were to try and make a move at pilots salary's
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I think RYR may be in for a rocky ride in the near future. Its true that the fall in the dollar has masked the rise in fuel prices to some degree but the fall/rise has not been equal.
The only reason people fly with RYR is the low fares and if they can't sustain these the pax will leave. Many airlines have a loyal customer base, I don't believe RYR do. As all the profits come from in flight sales and "extras" the fall in load factors will be very painfull.
The RYR experience is SO bad we may all look back in 10 years and ask how they survived so long.
The only reason people fly with RYR is the low fares and if they can't sustain these the pax will leave. Many airlines have a loyal customer base, I don't believe RYR do. As all the profits come from in flight sales and "extras" the fall in load factors will be very painfull.
The RYR experience is SO bad we may all look back in 10 years and ask how they survived so long.
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The announcement today is part of a PR stunt for what will happen. There are 30 managers having a pay freeze. So what do we consider to be their averag salary(no bonus!) say £180,000 and lets say they would ideally have received 4%? So that's a saving of......£216,000.
You see where I'm coming from...what is that in the scale of things when their fuel bill in 2007 was some Euro 585,031,000. Now that represented approx 32% of their costs and was at a rate of $65 a barrel. Fuel now is up at $107 and their unhedged so that's an increase in costs of around 60% for fuel leading to a fuel bill excluding increaded aircraft numbers and additional flying to around Euro 936,050,000 which is some £278 million or nearly 75% of their profits for 2007.
Anyone had a look at the Euro rate recently? Ok so they gain as the Euro Dollar rate means the increases aren't as bad for aircraft costs and the dollar bills but sadly as they have so many aircraft based in the UK and earnings in sterling where the rate has dropped from 1.48 a year ago to 1.27 today meaning their income has also dropped off considerably....
Challenging times ahead and not just for Ryanair.....
You see where I'm coming from...what is that in the scale of things when their fuel bill in 2007 was some Euro 585,031,000. Now that represented approx 32% of their costs and was at a rate of $65 a barrel. Fuel now is up at $107 and their unhedged so that's an increase in costs of around 60% for fuel leading to a fuel bill excluding increaded aircraft numbers and additional flying to around Euro 936,050,000 which is some £278 million or nearly 75% of their profits for 2007.
Anyone had a look at the Euro rate recently? Ok so they gain as the Euro Dollar rate means the increases aren't as bad for aircraft costs and the dollar bills but sadly as they have so many aircraft based in the UK and earnings in sterling where the rate has dropped from 1.48 a year ago to 1.27 today meaning their income has also dropped off considerably....
Challenging times ahead and not just for Ryanair.....
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Let's remember your all talking about a very clever businessman here - I'm sure Ryanair will use this to their best advantage, killing out competition and therefore emerging stronger. FR used 9/11 and other aviaition downturns to grow, as others reduced in size.
Seriously, everyones banging on about Ryanair is frustrating. I have had nothing but ontime, efficient flights, getting me to where I want to be. I don't fly with them because I like their service, I do it because they've made travel accessible to me more frequently at amazingly low fares.
Ryanair will emerge on top, they will have had plans for this for about 12 months, its not as if MOL woke up last week and went oh sh*t, I forgot the fuel isn't hedged from April 1st.
Seriously, everyones banging on about Ryanair is frustrating. I have had nothing but ontime, efficient flights, getting me to where I want to be. I don't fly with them because I like their service, I do it because they've made travel accessible to me more frequently at amazingly low fares.
Ryanair will emerge on top, they will have had plans for this for about 12 months, its not as if MOL woke up last week and went oh sh*t, I forgot the fuel isn't hedged from April 1st.
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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
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
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Ryanair shares
Ryanair share price has dropped from 12 Euros to under 3 in one year
While this is not great, its a little less dramatic than a 12 to 3euro fall.
This was carried out to improve the liquidity of the stock.
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This was carried out to improve the liquidity of the stock.
As an investor, micko has presided over the wholesale destruction of my wealth and built a model that looks incapable of recovering my (now lack of) wealth in the future.
As an employee, he has built an operational model conducive to far more safety-related incidents than average while creating an awful place to work.
From either point of view, he has to go.
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Camel,
Sorry to here about your loss.Its a risk in any stock.
Share splits are common after a large increase in a share price, as was the case in RYR in late 06/early 07.
All in all,they are just a feature of large listed companies
Sorry to here about your loss.Its a risk in any stock.
Share splits are common after a large increase in a share price, as was the case in RYR in late 06/early 07.
All in all,they are just a feature of large listed companies
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Yes, they have, nobody is questioning that. The problem is that their low prices cannot be the only means to stimulate the demand, not any more. It's time for some changes, activate your brains, gentlemen!
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I still believe Ryanair's model can sustain this without the need to be drastically changed. Ryanair have and still are moving towards becoming a medium that sells add ons - this is where their future business lies.
One example, the more people ITV can get tunned into Corination Street the more the advertising space is worth. The people onboard ryanair flights are the equivilent of this. The more passengers they carry, the more the product on board is worth. The advertising they have on their seat backs, lockers, in their magazine. The more check-in fees, bag fees, excess fees, on board sales through buy as you fly and the trolley services. They are a flying shop - which begins from the moment you click on their website right through to the moment you arrive in the final city (dont forget the cut they get from bus transfers from remote airports). They are strengthening this brand, diversifying quickly into new markets in order to add value to "RYANAIR" - the company.
I understand, some thin routes will have to go - but this is not a life or death matter for Ryanair. Fuel is a major issue for them, but it wont cause the business too much damage - just expect an increase in charges else where on the extras - this is where the revenue will be generated mainly from in years to come. MOL has already stated he wants all flights to be free (thats OTT we all know).
Now this isn't a Ryanair rant, I'm not a Ryanair fanatic - but I believe in their business model, it has and will continue to prove successful. I do appreciate everyones comments, and it would be stupid to say that this isn't a major headache for MOL and the management of FR. But I'm sure somewhere along the line Ryanair will use this to their advantage - why, they've already started, with their mass publicity stunt on freezing wages - now isn't everyone becoming more aware of the Ryanair brand, just through these types of stunts.
One example, the more people ITV can get tunned into Corination Street the more the advertising space is worth. The people onboard ryanair flights are the equivilent of this. The more passengers they carry, the more the product on board is worth. The advertising they have on their seat backs, lockers, in their magazine. The more check-in fees, bag fees, excess fees, on board sales through buy as you fly and the trolley services. They are a flying shop - which begins from the moment you click on their website right through to the moment you arrive in the final city (dont forget the cut they get from bus transfers from remote airports). They are strengthening this brand, diversifying quickly into new markets in order to add value to "RYANAIR" - the company.
I understand, some thin routes will have to go - but this is not a life or death matter for Ryanair. Fuel is a major issue for them, but it wont cause the business too much damage - just expect an increase in charges else where on the extras - this is where the revenue will be generated mainly from in years to come. MOL has already stated he wants all flights to be free (thats OTT we all know).
Now this isn't a Ryanair rant, I'm not a Ryanair fanatic - but I believe in their business model, it has and will continue to prove successful. I do appreciate everyones comments, and it would be stupid to say that this isn't a major headache for MOL and the management of FR. But I'm sure somewhere along the line Ryanair will use this to their advantage - why, they've already started, with their mass publicity stunt on freezing wages - now isn't everyone becoming more aware of the Ryanair brand, just through these types of stunts.
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frfly,
You are wide of the mark!
When the story line at Coronation Street is naff (your anology) the viewers leave, as do the advertisers. This IS RYR's problem, they are naff. The only thing they have is their percieved low cost. As soon as this myth is blown they are stuffed.
You are wide of the mark!
When the story line at Coronation Street is naff (your anology) the viewers leave, as do the advertisers. This IS RYR's problem, they are naff. The only thing they have is their percieved low cost. As soon as this myth is blown they are stuffed.
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I understand, some thin routes will have to go
The other option to thin routes is putting the aircraft at more established, and thus more expensive, airports. This further erodes the perceived competitive advantage. They tried this tactic at DUB, putting lots of aircraft in to run EI out of town and it failed miserably as EI ran up record profits and a higher load factor on shorthaul than ryr. Expect it to fail elsewhere also, the public can't be fooled forever.
There's no time for sentiment in business and mad mick is merely an employee. When employees don't produce, they have to go. New management required at the white house.
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The games up???
the public can't be fooled forever
Having regularly flown them, their customer service is from time to time outreagous. Aand i would take a guess that it is from the top down
While I havent expieriencd any cancellations for a time, I have lost track the number of times I've been standing in the DUB portakabin pier while departure time ticks by,without any indication of how long the delay will be.Or another recent occasion, while been the first pax to board at LGW, a CC member shouts at me in pigeon English,that I can only board from the rear...never figured out why..much to the amusement of the LGW ground staff
. I could go on......Eventually people get fed up of these sort of shenanigans and are willing to pay a little premium to be treated as a person. Especially in the irish market we have so much choice, unless your flying to Bydgoszcz etc, there will be EIN or REA waiting in the wings!
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MOL is a very purposeful guy, but a straightforward type of man. His role has been extraordinary in developping the company, in negotiating the deals, in rising the profitability and keeping an eye on efficiency. But he seems kind of locked in that style of activity and so is Ryanair lacking some kind of subtlety.
The style of MOL's thinking is: "We know better what you need, you need just very cheap flights, we do not have to offer you anything else." That, however, is not always true, it's delusory indeed.
Firstly, many people demand to be treated in a "special" way, they want to be cared for and, while they aren't obviously any good target for lcc's, they tend to be naive in some way and one might try to offer them something "special" to "soften" this attitude and to convince them to travel in a different way. Ryanair however does not bother to care for anybody beyond the absolute minimum, so no chance to be accepted by this kind of people.
Next, there is a group of modest, unpretentious people who do appreciate the effectiveness, good economy and do not need excessive luxury. These principles could facilitate getting the confidence and promoting low-cost travel. But I doubt if the "one-penny-flights" are the best kind of marketing towards them. Rather poor one.
Beside, some people (like many here in Finland) are convinced that "nothing very cheap can be of a good quality". They could consider flying with Ryanair for a reasonable price, but not for "free". Again, a one-penny marketing acts as a deterrent rather.
Now, who are the customers waiting for those cheap flights? Maybe me sometimes, maybe you. But that kind of marketing can have its side-effects either. Some could say: "Well, 20£ flights? Why bother. Let's wait for one-penny flights. It's too expensive right now".
Time for changes, I agree. A bit more conveniently, with multiformity, listening to passengers' needs.
The style of MOL's thinking is: "We know better what you need, you need just very cheap flights, we do not have to offer you anything else." That, however, is not always true, it's delusory indeed.
Firstly, many people demand to be treated in a "special" way, they want to be cared for and, while they aren't obviously any good target for lcc's, they tend to be naive in some way and one might try to offer them something "special" to "soften" this attitude and to convince them to travel in a different way. Ryanair however does not bother to care for anybody beyond the absolute minimum, so no chance to be accepted by this kind of people.
Next, there is a group of modest, unpretentious people who do appreciate the effectiveness, good economy and do not need excessive luxury. These principles could facilitate getting the confidence and promoting low-cost travel. But I doubt if the "one-penny-flights" are the best kind of marketing towards them. Rather poor one.
Beside, some people (like many here in Finland) are convinced that "nothing very cheap can be of a good quality". They could consider flying with Ryanair for a reasonable price, but not for "free". Again, a one-penny marketing acts as a deterrent rather.
Now, who are the customers waiting for those cheap flights? Maybe me sometimes, maybe you. But that kind of marketing can have its side-effects either. Some could say: "Well, 20£ flights? Why bother. Let's wait for one-penny flights. It's too expensive right now".
Time for changes, I agree. A bit more conveniently, with multiformity, listening to passengers' needs.
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Airports
They should also review their policy of not flying into major airports as people would be willing to pay more if it meant flying to the likes of CDG instead of the likes of Beauvais.
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Ryanair - Birmingham
Just found this intresting article,
http://www.economist.com/business/di...ry_id=10911290
Ryanair, Europe’s leading low-cost airline, has even promised a new venture linking the likes of Birmingham (England) and Baltimore.
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Policies
I think (as do most others), that if they were to offer assigned seating they could make a bomb in dosh off it.
20 euro for an emergency exit seat.
10 euro for pre-assigned seating.
All remaining seats assigned at checkin.
It would make boarding faster for sure too, and make the Ryanair experience a lot more pleasurable for their customers.
20 euro for an emergency exit seat.
10 euro for pre-assigned seating.
All remaining seats assigned at checkin.
It would make boarding faster for sure too, and make the Ryanair experience a lot more pleasurable for their customers.
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"The other option to thin routes is putting the aircraft at more established, and thus more expensive, airports. This further erodes the perceived competitive advantage. They tried this tactic at DUB, putting lots of aircraft in to run EI out of town and it failed miserably as EI ran up record profits and a higher load factor on shorthaul than ryr. Expect it to fail elsewhere also, the public can't be fooled forever. "
Aer Lingus did not have higher LF's that RYR at DUB. Neither Airline releases LF's for a base. RYR's figure would include all bases I believe. EI's would mainly be Dublin, so I dont think you can compare.
Also EI's record profits were only compared to their own standards. If their best ever profit was 5 EUR and then they made 8 EUR, they would be record profits. Does not necessarily mean its a decent performance.
Aer Lingus did not have higher LF's that RYR at DUB. Neither Airline releases LF's for a base. RYR's figure would include all bases I believe. EI's would mainly be Dublin, so I dont think you can compare.
Also EI's record profits were only compared to their own standards. If their best ever profit was 5 EUR and then they made 8 EUR, they would be record profits. Does not necessarily mean its a decent performance.