Ryanair: being nice pays off

Shares in Ryanair have jumped following an overhaul of the airline's customer services.

Europe's biggest budget airline has reported a 32% jump in first-half profits and lifted its annual earnings forecast by 20% to €750m-€770m. Ryanair (LSE: RYA) said that a strategic overhaul and a revamp of its customer service were the main reasons for its sharply improved performance.

"If I'd known being nicer to customers was going to work so well", said CEO Michael O' Leary, "I would have started many years ago." The shares jumped by 7% on the news.

What the commentators said

If this is what can be done by being nice to people, said Nils Pratley in The Guardian, perhaps O'Leary could "estimate how much shareholder value Ryanair squandered over two decades by being so objectionable".

Last year, the firm decided "to woo customers fed up with feeling more like cargo than people", said Olaf Storbeck on Breakingviews. That meant lower add-on charges and a smoother, more flexible travel experience. It has increased flights to major airports, having hitherto concentrated on smaller ones.

These changes have helped entice business passengers, said Thao Hua in The Wall Street Journal. And Ryanair's odds of gaining market share in this area look good.

Its low cost base bodes well, especially since many major carriershave cut capacity on European routesto concentrate on more lucrativelong-distance routes. As Lufthansa has shed routes in Germany, for example, Ryanair has gained a bigger foothold.

The firm should now pay attention to keeping its staff happy, said Storbeck. It has a "long history of strained labour relations". Pilots are reputedly especially unhappy. Employees comprise just 10% of operating costs. "Ryanair can afford to invest in keeping them content."

Recommended

These 3 top value stocks offer
Share tips

These 3 top value stocks offer

Professional investor Adam Rackley of Cape Wrath Capital highlights three overlooked value stocks to buy.
29 Sep 2022
Why everyone is over-reacting to the mini-Budget
Budget

Why everyone is over-reacting to the mini-Budget

Most analyses of the chancellor’s mini-Budget speech have failed to grasp its purpose and significance, says Max King
29 Sep 2022
Bank of England spends £65bn to “restore orderly market conditions”
Budget

Bank of England spends £65bn to “restore orderly market conditions”

The Bank of England has said it will spend £65bn buying bonds to stabilise the financial markets after the government’s mini-Budget. Saloni Sardana ex…
29 Sep 2022
Why UK firms should start buying French companies
UK stockmarkets

Why UK firms should start buying French companies

The French are on a buying spree, snapping up British companies. We should turn the tables, says Matthew Lynn, and start buying French companies. Here…
28 Sep 2022

Most Popular

Earn 4.1% from the best savings accounts
Savings

Earn 4.1% from the best savings accounts

With inflation topping 10%, your savings won't keep pace with the rising cost of living. But you can at least slow the rate at which your money is los…
27 Sep 2022
How the end of cheap money could spark a house price crash
House prices

How the end of cheap money could spark a house price crash

Rock bottom interest rates drove property prices to unaffordable levels. But with rates set to climb and cheap money off the table, we could see house…
28 Sep 2022
What changes to the pensions charge cap mean for you
Pensions

What changes to the pensions charge cap mean for you

The government could raise the pensions charge cap – the amount you can be charged in your workplace's default pension fund. Saloni Sardana explains w…
27 Sep 2022