Ryanair in 2014

[Passenger]

Where you there at those recent meetings? No? So how the hell do you know? Have you got nothing else to do then looking up news articles that are seriously outdated so you can make your imaginary stories fit?

Outdated article? Imaginary stories? Don't think so:

1. I quoted from an article from 16th September 2013. You may call that "outdated", but I think it's quite relevant when a long term strategy is discussed.

2. I did not invent that O'Leary told in that article that Ryanair will not go back to the GDSs. Check the above article: I quoted him correct: "We are not going back on GDSs and pay ludicrous amounts to Amadeus, Worldspan or Sabre who add nothing to the process. It used to cost us 20% of revenues for a service 80% of passengers are happy to do themselves online".

So why this policy change – if it’s true?

Figures now proof that O'Leary was wrong with his 2002 withdrawal from the GDS’s. He now understands that those “passengers not happy to do bookings themselves” include the large majority of the corporate travel, and that travel agents book them with Ryanair’s direct competition: EasyJet in general and local competition in all countries where Ryanair operates.

O’Leary is right that GDS’s are very expensive for Ryanair, seen the business model (low basic rates, lots of ancillary revenue, regional taxpayers support, high surcharges). But so what? When the nett result for these bookings remains positive and when they otherwise book with your competition, you should go for it.

[Inquirer]

Ryanair posts Q3 results (actually Q4 on a normal calendar, as the fiscal year at RYR starts in March)

http://www.tijd.be/nieuws/ondernemingen ... .art?ckc=1

summary:
RYR grew their passenger numbers by some 6%, but couldn't book any revenu growth from it; as a consequence it lost more than €35M between Sept and Dec, their worst result in 5 years, and slightly worse than what analysts had expected even.
In comparison to last year, that's a financial deterioration of €53M over the 3 month period.
RYR maintains their outlook for the whole year as it sees the price war weakening and has hopes to turn the tide by upgauging their product and service levels, and thus their revenues.

I got flamed for predicting this over the summer already as the first signs emerged, but these results are showing me right: competitors like Easyjet and vueling are really squeezing ryanair hard by offering far superior service levels on very attractively priced flights, to which the traditional ryanair response of ever lower priced tickets just isn't up anylonger as they now have to sell them below cost even in order to keep the pricing advantage sufficiently wide to keep people from defecting to others: ryanair had to slash prices by 9% on average.
Their latest strategy change in which they drop their 'abrupt culture' is thus indeed to be seen as a way to catch up with their far more successful competitors which seem to have hit the real sweet spot in the market and to be able to increase prices: competitively priced higher frequency flights to main airports, offered with a whole range of different service levels depending the customer's needs seem to be what most passengers really want, over the absolute lowest priced ticket after all then.

IMHO, Ryanair risks a long and difficult uphill battle to cope with their unsuitable corporate image, the significant cost increases and the presence of very successful competitors which have the advantage of the first mover, so it seems that after a decade of being in the driver's seat, MOL has been send back to the backbenches and the new kids in town are vueling, germanwings and indeed, easyjet, which saw the trend sooner and already did the transformation some time ago.

[cathay belgium]

Hi,

Or... better stay away of these movements to better service,main airports, it will cost too much !
Everybody his own product and success, you can't go to the easyjet system with the ryanair type of traveller.
Guess they don't follow you to the more expensive main airports.. at a higher cost which will be there for sure.
Why fly to Milan/Rome with FR at almost the same cost when you get there with SN / EZY for a bit more.. with better timetables...


Keep your own strength and never change a winning team, MoL :p

CXB

[airazurxtror]

The original report is here :
http://www.ryanair.com/doc/investor/2014/q3_2014_pr.pdf

Ryanair today (Feb 3) reported a Q3 Loss of €35m, in line with previous guidance.
Traffic grew 6% to 18m passengers.
Revenue per passenger declined 6%, as strong ancillary revenue growth offset a 9% fall in fares.
Excluding fuel, sector length adjusted unit costs fell by 9%.
Ryanair’s full year profit guidance remains unchanged at approx. €510m.


Michael O'Leary (extracts) :

In December we opened 4 new Italian bases in Rome (Fiumicino), Catania, Lamezia, and Palermo in response to concerns about Altalia and its high fare domestic routes.
We announced 4 new bases for spring 2014 at Brussels (Zaventem) which opens February 28, Athens and Thessaloniki (April 1) and Lisbon (April 2).
We expect these new bases to provide substantial growth opportunities for Ryanair, particularly as we commence deliveries in September 2014 of our new 175 Boeing 737-800 NG aircraft order.
Over the next 5 years, as Ryanair grows from 80m to over 110m customers p.a., we expect a substantial portion of this growth will be at primary airports, where high fare incumbents are financially weak and restructuring, and the remainder arising at secondary airports driven by attractive low cost growth incentives.

Surely not the best of year for Ryanair; nevertheless, with an expected profit of more than 500 million euros for the full year, one can't very well say that Ryanair is on the brink of falling apart ...

[sean1982]

Funny how some people seem to bask in pleasure and euphoria when there is some bad news coming from Ryanair (If 520m EUR annual profit is considered bad news) and even sliding FR to the "back bench" because of 1 quarterly loss It's just the biggest airline in Europe and will be for quite some time

[cnc]

Keep your own strength and never change a winning team, MoL :p

nothing lasts forever!
FR knows that there will come a time when all subsidies will end. when that happens their 500 million "profit" tumbles down to a 300 million loss so adaptation is needed. this shows us FR is a modern and not narrow sighted airline unlike some of the legacy carriers.
its not the strong that survive but those who can adapt to the changes

[flightlover]

Over the next 5 years, as Ryanair grows from 80m to over 110m customers p.a., we expect a substantial portion of this growth will be at primary airports, where high fare incumbents are financially weak and restructuring, and the remainder arising at secondary airports driven by attractive low cost growth incentives.

That level of growth is to be seen. I wish MOL and Ryanair much success trying to achieve that goal.
However the last bit of this extract is the one I'm after:

"and the remainder arising at secondary airports driven by attractive low cost growth incentives"

This settles the discussion about 'incentives' (aka: subsidies) once and for all. No incentives means higher prices. Higher prices means less reason off existence for FR.

Lets just see how this battle pans out.

[airazurxtror]

This settles the discussion about 'incentives' (aka: subsidies) once and for all. No incentives means higher prices. Higher prices means less reason off existence for FR.

Lets just see how this battle pans out.

Who said that those incentives will disappear ?
Besides, Ryanair is not the only one which receives subsidies; some carriers get them - even at a primary airport like Zaventem ...
But I agree with you : let's wait and see how it turns out. It'll be most interesting !

[Inquirer]

Funny how some people seem to bask in pleasure and euphoria when there is some bad news coming from Ryanair

If you refer to me, you are very wrong.

For the rest I subscribe to what others have adviced you before: try to take a step back and don't associate so closely with your employer. There's really no need to take any report which doesn't add to the gloss and glory of ryanair as an outright and personal attack.

As your company is forced to move out of it's market niche (I know you will once again take offence at the word itself, but the Ultra-low cost market really is 'just' a niche, as even your CEO now admits), it will inevitably face much more outright competition, competition which is playing on a far more even level and is sometimes clearly in the driver's seat even, so ryanair will face more headwind in future and have to content itself with less that it used to have in the past: better become accustomed to a more mixed financial reporting and occasionally some setbacks like this one (and the upcoming Q4 too, for what it's worth).

It's just the normal way things go at a more mature company so you'll just need to mature with your employer too, that's all, and believe me: you'll both be fine then.

Thank you.

[sean1982]

so you consider Germanwings and vueling who have in their temporary reports for 2013 all posted losses, the driver seat? Only easyjet is performing better at the moment.

Advice not taken, thank you very much.

[Inquirer]

Yes, they are very much indeed, as together they are steering your company (which as you remind us all of, is the biggest airline in Europe by passenger numbers) in a direction nobody ever thought it would go in, not even it's CEO just 9 months ago!
If that's not proof of them having taken over the steering wheel of European aviation and firmly being seated on the driver's seat, I don't know what it, really.

[teddybAIR]

phew! can we get back on topic again instead of getting dragged away again in a dicussion on the gender of angles, please?

Anybody got a twenty on the load factors for RYR out of BRU at this moment? They launch in less then a month, so I'm curious to see how well they will be kicking off. By the way: anything special foreseen for the first flight out of BRU?

[sean1982]

Yes, they are very much indeed, as together they are steering your company (which as you remind us all of, is the biggest airline in Europe by passenger numbers) in a direction nobody ever thought it would go in, not even it's CEO just 9 months ago!
If that's not proof of them having taken over the steering wheel of European aviation and firmly being seated on the driver's seat, I don't know what it, really.

If you take a 6 year old and put him in the drivers seat of a car and send him down the road he is also gonna make the traffic around him move out of the way ... that doesn't make him a good driver

[airazurxtror]

Ryanair, easyJet and Norwegian, for instance, regularly publicize their quarterly results on their website.
It's easy to follow their evolution, and to comment/criticize/rejoice at the first drop in profit.
Brussels Airlines quarterly results are much more difficult to find (perhaps a good thing for them).
I

[Inquirer]

If you take a 6 year old and put him in the drivers seat of a car and send him down the road he is also gonna make the traffic around him move out of the way ... that doesn't make him a good driver

Oh dear...
I fear you are going to have not such a pleasant time ahead of you in future if you keep sticking your head in the sand.

Luckily for you, your company doesn't take the same attitude as you do, but has decided to adapt to the new reality as quickly as possible in response to the deteriorating figures which they must have seen come through as from this Spring, because as these negative Q3 figures clearly show: the impact of a new generation of low cost, -but not low service- airlines from all over Europe (be it vueling is Spain, Easyjet on the continent, Norwegian in Scandinavia and indeed Germanwings in Germany) on your company's results is definitely not to be underestimated and simply unsustainable in the long term even!

As I've already told you in June: it's not because the plane you're on is still as full as ever before, that things are going well still. You almost blew a fuse over that remark of mine, but with Q3 now on the table, I hope you can agree that there's more thruth to it than you could ever imagine, so better reconsider the advice given above, as well as the guidance attached to it.

Also, I dont want to rub more salt in the wound, but one should remember all this comes at a time when most other companies in Europe are reporting significantly improved earnings on the back of both cost cutting programs and of course a global economic improvement, so the disparity is eye popping indeed.

[sean1982]

There is no wound .. so no salt to rub in ... If you look at FR's last years reports Q3 and 4 have always been on the lower side as the winter and start of the year is a low period for any airline (with the exception of Xmas) .. however spring and summer always make up for this ... hence the 520million EUR profit .... wich is still significantly higher than most companies in Europe.

[Inquirer]

Indeed, and for the first time since more than 5 years there's a loss in Q3, there biggest ever even, compared to a healthy profit over the same period last year still, all while the market is picking up and the economic outlook is on the upside! Starting to see the trend to which your management is forced to react?

Now it is 'only' €35M loss and ryanair is 'only' lossmaking in winter with the summer traditionally still offsetting it, but better not to content yourself with such traditional excuses until you run out of them (what's to say next summer would have still been sufficiently profitable to offset expected losses over wintertime by an unchanged strategy, for instance?), which is exactly what ryanair aren't doing, so that's very good and I've repeatedly praised them for that, even though I think they do not change enough.
(=> seperate brand for the new product + dedicated CEO would have been much better, IMHO)

But by doing so they have to move out of their niche (you can call it their 'comfort zone' if you prefer) and into a much more open battlefield where they won't be in the driver's seat any longer, so better prepare for a more volatile future ahead, one where commercial successes will be intermixed with disappointing setbacks, just as at other places too.

Just be happy the market is picking up: it should make the transformation all the easier: imagine the same situation happening to you 2 year ago for instance!

[teddybAIR]

Anybody got any relevant information such as the performance of RYR out of BCN? If I'm not mistaken, they seem to compete on the primary airport of Barcelona quite succesfully for quite a while now, no? So why would ryanair not be able to deploy her business model in BRU?

Everybody seems to start from the hypothesis that RYR, SN, JAF, etc cannot co-exist in BRU, but why not?!

[sean1982]

Anybody got any relevant information such as the performance of RYR out of BCN? If I'm not mistaken, they seem to compete on the primary airport of Barcelona quite succesfully for quite a while now, no? So why would ryanair not be able to deploy her business model in BRU?

Everybody seems to start from the hypothesis that RYR, SN, JAF, etc cannot co-exist in BRU, but why not?!

That's what I have been saying since the start of this whole BRU story

[teddybAIR]

Ok sean, then we seem to agree. You have to understand that I'm not really inclined to read the last 9 pages based on the last 10 posts that were exchanged, no offense!

Despite the fact that some here have an above average affinity for a certain airline and an above average grudge for another, I believe that RYR has proven that it has a solid business model. So has JAF by the way. Brussels Airlines seems a different balgame and a lot will depend on the principal shareholder. Nevertheless, I believe that shareholder is there to stay, but never say never.