Ryanair Outperforms Itself, Results May Not Be So Miraculous
So Ryanair is upping the ante once again. As the european economic crises unravels, Michael O’Leary’s company, true to its words, seems to make a point of showing how it thrives on difficult economic situations. There have been many comments on the news, but Aeromorning.com‘s very own aero-specialist Pierre Sparaco signed what has to be the most comprehensive opinion on Ryanair’s recent performance today. For those of you who don’t speak French (I can’t blame you), here’s a quick recap of what he had to say:
- In spite of Michael O’Leary’s declarations that Ryanair doesn’t impose any oil surcharges, the main cause for Ryanair’s results lies in a constant augmentation of its prices. The carrier’s fares have followed a stupendous growth, reaching the symbolic 50€ mark on average. That’s a 13% increase year-over-year for the fares alone. Simultaneously, Ryanair has further increased its ancillary revenues, reaching a 61€ per-passenger average, for a 11% year-over-year increase.
- With a fleet close to 300 aircraft, Ryanair benefits from exceptional economies of scales. The airlines also retains a very simplistic structure, having no commercial network, apart from its website. This [and a wealth of other cost-cutting measures] allows for an alleged average cost per passenger around 23€. Still according to Ryanair’s very own finance guys, easyJet’s per passenger cost is around 62€.
- Ryanair suddenly stopped talking about slowing or staling its growth for a few years. On the contrary, it’s now shouting from every rooftop that it will be aiming for intense growth rates over the next few years. The company’s also very openly talking about buying new planes [something which I've already discussed at length on this blog]. Seeing as Comac may very well be going for the same parts Airbus and Boeing use in their aircraft, this could translate to lower transition-related costs for Ryanair.
- Ryanair may be bragging about its 75 million passengers, its 47 bases or its capacity to “negotiate” by slamming doors and stomping its feet, but it will never turn away from an appetizing opportunity. The best example? Ryanair’s behaviour at Marseilles. A base it closed with much ado, even if, almost a year later, apart from its planes not staying on the tarmac overnight, absolutely nothing else has changed.
I must say Pierre Sparaco pretty much nails it here. However, I feel he missed on a few additional factors in Ryanair’s cost-cutting strategy. Such as the company’s particular relations with its workforce, its deep affection for tax havens or its rule of use for aircraft. Things that are explored much more at depth in Air Scoop‘s latest report, which I’ve finally come around to reading and can’t recommend enough.
Pierre Sparaco is not alone with no thought for the workforce.Look at the IAA and CAA,They sit by hand in hand with O’leary,well the IAA do…Ryanair’s cost cutting strategy,pay less tax is life for some,Exploitation strategy is blind to those who have FULL pockets…….and i will tell you PLENTY have Full pockets…..
Great post Thanks