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Even a pandemic can’t keep Ryanair from flying higher

Even a pandemic can’t keep Ryanair from flying higher

Although profits may be down this week, the airline’s shares – and its chief executive’s optimism – are defying gravity

Who’s afraid of the Delta variant? Not Michael O’Leary. Over the last 16 months of sickness, death and lockdown, the billionaire Ryanair boss has rediscovered his controversy button and has lately been loudly telling governments to stick their “scariants” and let everyone fly again.

Much of his ire has been reserved for Ireland, whose scientific and medical leaders must envy the UK’s Chris Whitty for only getting accosted in the park.

Every airline is of course demanding the reopening of travel, although most observe the niceties of saying public health comes first. But then Ryanair’s pandemic has not followed the trajectory of most.

Almost uniquely among European carriers, Ryanair’s share price is higher now than it was in February 2020, before travel restrictions and the grounding of fleets saw investors take fright and wipe out most of airlines’ and travel firms’ market value.

While the price of IAG (owner of British Airways and Aer Lingus), easyJet and others has remained low, Ryanair’s has bounced back – and is now almost 50% higher since O’Leary increased his stake in the autumn doldrums, making his share worth around €700m (£600m).

So despite the pandemic, Ryanair will report its first-quarter 2021-22 results on Monday in a relatively buoyant mood, even as the sector tears it hair out over the continuing and confusing Covid restrictions at the start of peak season. Available fares from the UK to Europe remain staggeringly low for summer, even by Ryanair standards: a family could in theory fly to the Med and back for less than the price of the PCR tests – should they wish to gamble on changing rules and Ryanair’s refund policy.

What these troubled years may indeed bear out is O’Leary’s bullish view that the more market volatility, the better for his airline. Latest traffic numbers, while still a fraction of 2019, leapt to 5.3 million passengers in June, and Ryanair still believes it will deliver the huge growth it promised, just a couple of Covid-hit years later.

To that end, it has taken its first deliveries of Boeing’s 737 Max, a plane O’Leary calls a game-changer for profits, with increased capacity and range and better fuel efficiency. Its terrible history may be less in focus on the other side of a pandemic, when all aircraft were grounded, not just one troubled model. According to Ryanair, no passengers took up an option to switch planes when it brought the Max into service last month.

Only Wizz Air in Europe has looked as likely as Ryanair to benefit from aviation’s worst-ever crisis. Investors have continued to back expansion at the Hungary-based airline, one which apes Ryanair’s own playbook, with labour costs so low that even O’Leary has raised an eyebrow. (Not all staff, of course: chief exec József Váradi was given an extraordinary bonus incentive package this month that would pay him €100m if he more than doubles the share price in five years.)

That obscene bonus is pretty much, given the odd million, the same windfall O’Leary stands to pick up in 2024 on a similar share-price or profit target, despite shareholder revolts over his remuneration. Profits may have plummeted, as Monday’s results will show – but the boss’s share price target now looks more feasible after the pandemic than when it was set in 2019.


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