The oil price may remain around the $50 a barrel mark, but things are looking considerably better for Ryanair this year in comparison to 2004, says Kevin Smith on Reuters.co.uk. The no-frills airliner reported record annual earnings; with profit after tax in the last 12 months to April coming in at 269m euros. This is a 19% hike from last year's results.
It's no surprise then that the group's share price has soared some 45% during the last year. The stock is also a "must-own", according to Davy Stockbrokers' Stephen Furlong. So how has the airliner turned its fortunes around following its profit warning 18 months ago? It's not changed that much, the group said: instead the firm has benefited as rival carriers hiked their own fares, pushing passengers its way in the process. British Airways for one has imposed fuel surcharges on its passengers which Ryanair has avoided doing so far.
Yet it seems that the low cost airliner may be "getting frillier", says Lex in the FT. Passengers are now having to cough up for more extras than before, from hotels to travel insurance. Moreover, it could just start charging for former freebies, such as checking in luggage. So much so that the group may well soon come to look like a "profitable supermarket with (almost) free flights attached".
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And the sector as a whole is also facing more challenges, says Lex. In order to grow revenues, they will need to fly more and more people. They may succeed in this for many years yet passenger numbers hiked by some 20% in the last 12 months but at some point a "ceiling will be reached"
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