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

Imperial Brands has an 8.3% yield – but what’s the catch?
Share tips

Imperial Brands has an 8.3% yield – but what’s the catch?

Tobacco company Imperial Brands boasts an impressive dividend yield, and the shares look cheap. But investors should beware, says Rupert Hargreaves. H…
20 May 2022
Investing in drugmakers: uncommon profits from curing rare diseases
Share tips

Investing in drugmakers: uncommon profits from curing rare diseases

Treatments for medical conditions with only a small number of sufferers can still be very attractive for pharmaceutical companies and investors becaus…
20 May 2022
Share tips of the week – 20 May
Share tips

Share tips of the week – 20 May

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
20 May 2022
How not to get beaten by inflation
Inflation

How not to get beaten by inflation

With inflation at 9%, and the bank rate at 1% you’re not going to get a real return on cash. But there are steps you can take to beat inflation, says …
19 May 2022

Most Popular

The ten highest dividend yields in the FTSE 100
Income investing

The ten highest dividend yields in the FTSE 100

Rupert Hargreaves looks at the FTSE 100’s top yielding stocks for income investors to consider.
18 May 2022
Aviva: a share for income investors to tuck away
Share tips

Aviva: a share for income investors to tuck away

Insurance giant Aviva is one of the highest yielding stocks in the FTSE 100 – and it’s cheap, too, making it a tempting target for income investors. R…
18 May 2022
Inflation is now at its highest since 1982 – is this the peak?
Inflation

Inflation is now at its highest since 1982 – is this the peak?

At 9%, UK inflation is at its highest for 40 years – and it’s not going anywhere soon, says John Stepek. That means you need to be much more active a…
18 May 2022