Why Ryanair is still soaring post-Brexit vote

Flying with the budget airline remains an ordeal but its business discipline is impeccable.

by Matthew Gwyther
Last Updated: 07 Nov 2016
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Food for thought

Ryanair - the biggest airline in Europe - has managed a 7% increase in post-tax profits for the six months to the end of September. Although the Irish low-cost carrier had a good summer it’s likely that average fares in Europe will fall by as much as 15% this winter as carriers struggle to keep their planes full in the face of weak demand to fly. Ryanair has a very low cost base and can afford to keep filling its 737s up at lower fares and taking pressure on its profits for longer than anyone else. It’s also pretty bullish about the future and has increased its long-term forecast growth rate saying that its thinks it will carry an amazing 200 million passengers a year by 2024 compared to around 119 million now.

This all despite Brexit, which Ryanair and its noisy boss Michael O’Leary strongly opposed. The 18 per cent decline in sterling’s value against the Euro has hurt both Ryanair and EasyJet. (Ryanair has a quarter of its revenue in the British currency and easyJet around a half.) Fares are already coming down in an attempt to entice travellers from the UK into Europe where they currently feel like paupers.

Today he was complaining about the British PM ‘faffing about’ in India when she should be sorting things out at home. ‘The UK government clearly has no idea what it’s doing,’ O’Leary told Bloomberg. ‘It has no agenda in terms of negotiations. I don’t think Mrs may or any of her ministers have any idea what they are doing. The agenda will be set by the Europeans. There is no incentive on the Europeans to help her or to negotiate.’ Imagine O’Leary finding himself in such a weak position.

Our Most Admired Companies awards for 2016 are approaching and - without giving anything away - Ryanair has done increasingly well over recent years. Their Quality of Management and Financial Soundness are both usually highly admired in their Transport sector. This is quite something for the company which was once happy to be the Millwall of the Skies - ‘no-one likes us: we don’t care.’ They have become really quite respectable because the oppo is coming down to their level.

Ryanair now offers numbered seats, which lessens the anxiety (if you are travelling with children) that the scramble to get on board into that blue and yellow hell will end up with you separated from your kids.But as soon as they conceded something mildly civilised like that then they have infuriated passengers by making it impossible to check in and print a boarding pass more than four days before departure without coughing up a punishment fee of £6 per person. So hundreds will wind-up trying to find a computer, wifi and a printer while on holiday to make sure they can get home again. This kind of thing drives people wild.

The truth is that - unless you are travelling business and have the means to be taken to an airport by limo before you turn left on entering the aircraft - air travel can be a fairly unpleasant experience whichever airline you travel with. The legacy carriers have been forced to trim what they offer by way of service to get their costs more in line with low cost carriers. So British Airways is not even going to give you one of those nasty little ‘wraps’ any more if you travel Economy short haul. Air France is even considering a new low cost long haul operation that could well end up with the kind of punch-up with its unions that got its head of HR almost lynched last year. He escaped over a fence with half his clothes torn off.

However disenchanted its staff may be - and they certainly rarely manage much by way of a welcoming smile - Ryanair’s costs are well under control. They work their planes, their pilots and their trolley-pushers very hard. Last year it even sued its own staff in Spain over strike action. And its punctuality is unsurpassed. No one really likes it but, unlike Millwall, Ryanair can claim to be top of its league.

Image source: Mark Hillary/Flickr


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