Ryanair - anyone concerned?

Selik

I've got a stake in them (1500 shares) and I'm thinking of dumping them tomorrow first thing. Their share price has been in steady decline ( 10%+ in the last few mths) and with the oil situation I can't see it getting better but only worse, particularly in the short term.

Diarmuid

If you are investing in airlines, I think they are a good bet in the long term... A friend of mine works in an private investing/ mgt consultants company and he's always raving about them... Then again it's not my money :-)

Tazz T

For obvious reasons, airiine share prices mirror oil prices, as in one goes up, one goes down. it's generally a good time to sell airline stock when oil is high and buy back in when it's low.

Obviously, finding the right buying and selling points is the challenge.

Reyman

Don't sell. This is a very good company, with zero debt and excellent performance indicators at every level.

Have a read of Siobhan Creaton's book on Ryanair and you'll understand why it leaves every other airline in Europe in the shade.

Selik

Well I see the share price has already dropped by nearly 3% this morning since the markets opened so I'm not the only one with these sentiments....

I've had the stock now for nearl 3yrs now and it just hasn't performed for me. Not to mention the fact that they don't even pay a dividend, which I woudn't mind so much if the stock was actually performing well, which it isn't right now.

dunkamania

Ryanair has two of the three things that I am looking for in an equity.

Strong management team and strong fundamamentals.

The third thing I am looking for,is as big a discount on the fair value of the firm as possible.

Ryanair is looking a little cheap now.If it continues too drop,I will be looking to buy.

Hitchhiker's Guide to...

a good well-diversified portfolio needs a transportation investment, Ryanair are a good choice. They will perform better than other airlines in times of high oil prices.

Although, the upcoming flotation of Aer Lingus would be a good option ... also, BA are undergoing a bit of a renewal under Willie Walsh.

You should think of your portfolio as your stake in a wide variety of industries. You are not necessarily choosing the best overall companies, but instead the best companies in each industry. Overall, this has been shown (by financial economists) to deliver the best long-term returns.

I can send you on the academic/practitioner research showing this to be the case, if you wish to read it.

Hitchhiker's Guide to...

Tazz T wrote:

it's generally a good time to sell airline stock when oil is high and buy back in when it's low.

i would suggest the following admendment to this:

"it is generally a good time to sell airline stock when oil prices are rising, and buy back in when they are falling.

The distinction being that when oil prices are at their highest, it presumably is a good time to buy, as the company can only get better as oil starts to fall back.

Lost Continent

Some things at Ryanair to consider.
1. The reason why so many flights have been cancelled earlier this year is because they can not crew them. Nothing to do with Boeing strikes. Why? Becuase they are acknowledged as the worst airline to work for in Europe. The myth of ryanair being a "high paying" airline is just that - a myth. For a company intending to expand at a rate of 1 aircraft every 2 weeks, a net loss of pilots on a monthly basis is unsustainable. There are now 7 aircraft grounded due to crew shortages and it will get worse (and there were plenty of grounded aircraft available to fly during the so-called Boeing strike).The market for pilots is now the strongest it's ever been post-war. Ryanair are not at the races and are haemorraging crews. Remember aircraft don't fly themselves.
To compensate, hire-ins are utilised (ie the Eirjet in Ballykelly). Wet-leasing in this manner costs huge amounts of money. So why won't Ryanair look after the staff they have, and work to attract the necessary numbers, rather than pi$$ away millions on wet-leases?
2. Examine the accounts closely. The core business of carrying passengers has a margin of about 8% - the same as Aer Lingus and BA. The bulk of the profit is from the sale and leaseback of the aircraft - sustainable only as long as the current cheap deal they have with Boeing exists. As Ryanair are seriously undercutting Boeing on selling on almost new B738's, it is unlikely Boeing or Airbus will be gullible enough to give Ryanair such a deal in the future. So once this deal runs out, you will see an airline with a margin comparable to Lingus or BA. However, these airlines have the scope to reduce prices to increase volumes. Ryanair do not.
3. O'Leary once said "the biggest danger to ryanair is when we start to believe our own bull$hit". The average investor and the media have long since believed, the day of the company also believing is upon us.

Selik

Well in the end I decided to compromise or hedge my bets so-to-speak. I've reduced my stake in Ryanair to 1000 shares. That way I can still be very happy to see the stock perform well going into the future but if it drops a bit more I'll just stick it out and be patient. I need cash now anyway.

conor_mc

Lost Continent wrote:

Some things at Ryanair to consider.
1. The reason why so many flights have been cancelled earlier this year is because they can not crew them. Nothing to do with Boeing strikes. Why? Becuase they are acknowledged as the worst airline to work for in Europe. The myth of ryanair being a "high paying" airline is just that - a myth. For a company intending to expand at a rate of 1 aircraft every 2 weeks, a net loss of pilots on a monthly basis is unsustainable. There are now 7 aircraft grounded due to crew shortages and it will get worse (and there were plenty of grounded aircraft available to fly during the so-called Boeing strike).The market for pilots is now the strongest it's ever been post-war. Ryanair are not at the races and are haemorraging crews. Remember aircraft don't fly themselves.

I think the crewing problems stem from flight-crew hour limitations. There is a limit of 900 hours per year, which is usually a running total in most countries except that the IAA in all its wisdom allows Ryanair to run this from March to March. So by Jan/Feb/Mar, a large number of pilots have already reached their 900-hour limit and are basically put on gardening leave until April 1st, hence the need to bring in wet leases.

With regard to bringing in new crews, it's commonly acknowledged in the industry that there's no shortage of candidates, only a shortage of experienced candidates. The main bottle-neck at the moment is in the type-rating training industry. This was hugely scaled back after 9/11 and hasn't really recovered to meet the demand that the likes of Ryanair/Easy etc. have for pilots. Much of the flight-sim hardware throughout Europe is running virtually 24 hours a day I believe.

Reyman

conor_mc wrote:

I think the crewing problems stem from flight-crew hour limitations. There is a limit of 900 hours per year, which is usually a running total in most countries except that the IAA in all its wisdom allows Ryanair to run this from March to March. So by Jan/Feb/Mar, a large number of pilots have already reached their 900-hour limit and are basically put on gardening leave until April 1st, hence the need to bring in wet leases.

Interesting background on the pilot's dispute!

Are you saying that Mike O'Leary stops paying his pilots from Jan 1 to April 1? Sounds very tough, and not good PR - there's no way they can get alternative work in those months.

conor_mc

Reyman wrote:

Interesting background on the pilot's dispute!

Are you saying that Mike O'Leary stops paying his pilots from Jan 1 to April 1? Sounds very tough, and not good PR - there's no way they can get alternative work in those months.

By gardening leave, I mean that they're still collecting salary, just legally unable to fly. Indeed, many may still be obliged to report to work for training etc. I'd imagine.

Generally, the feeling in the industry is that Ryanair are good for two demographics......

1) relative newcomers to commercial aviation who wish to build up their experience rapidly.

2) those who value being at home in their own beds every night, with very few exceptions.

I'm not an insider, so I'm only going by what I read/hear on the grapevine.