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".
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
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."
-
House prices rise 2.9% – will the recovery continue?House prices grew by 2.9% on an annual basis in September. Will Budget policies and ‘higher-for-longer’ rates dent the recovery?
-
Nvidia earnings: what to expectNvidia announces earnings after market close on 20 November. What should investors expect from the semiconductor giant?
-
Ryanair share price struggles to regain altitudeFeatures Ever since Ryanair’s dispute with the pilots’ union in September 2017, the airline has been struggling, with the share price down by half from its peak.
-
It’s time for Ryanair to grow upOpinion As a young upstart airline, a combative approach was just what Ryanair needed. Now it needs to mellow, says Matthew Lynn.
-
Ryanair loses altitudeFeatures Europe’s biggest budget airline will profit from rivals’ problems this winter. But it has also been making its own life difficult. Marina Gerner reports.
-
Low-cost flights hit air pocketFeatures A ferocious price war has killed off the weaklings in the airline sector. But the survivors are well placed to thrive. Chris Carter reports.
-
Ryanair to go on the offensive to reverse a fall in profitsFeatures No-frills airline Ryanair has reported its first fall in profits for five years. But it’s hoping a charm offensive will persuade passengers to part with more of their money.
