About the success of RYR

http://www.irishexaminer.com/opinion/columnists/matt-cooper/love-it-or-loathe-it-ryanair-has-certainly-scaled-the-heights-of-success-226250.html

Extracts :

THE significance and importance of Ryanair ordering the purchase of 175 aircraft from Boeing seems to have flown over the heads of many people in Ireland.

Boeing may be a world famous name, its aircraft used throughout the world, but it faces enormous competition from the likes of Airbus in Europe and new Chinese imitators. It has had battery problems with its new and crucial 787 passenger jet. The company has admitted that the Ryanair deal fills up Boeing’s 737 production “pretty significantly” until production of the new 737 MAX starts in the next few years, with first delivery projected for 2017. In other words, it needed guaranteed business.

Ryanair took advantage of that. Ryanair held the power hand in negotiations over price for these aircraft. The list price for 175 aircraft is about $16 billion. Ryanair is expected to pay little more than half because it is buying in such bulk. It has the money too to complete the deal with big borrowing, making the deal relatively low risk. The business has about €2bn in cash available to it, sitting on its balance sheet.

Ryanair tends to buck conventions. Interestingly Ryanair is one of the rare companies that does not seek to attract investors with the promise of dividends each year. They are asked to believe in the prospect of capital growth. It has paid off. The company is now worth just shy of €9bn. For what it is worth, the stockbroker Davy are speculating that the shares might be worth €7 each in the future, compared to €6.16 at which they were trading yesterday.

Let’s not forget too that Ryanair is not doing business for the sake of being busy, but is highly profitable. The company is expected to report profits for the year to March 31, 2013 of €540m, 7% higher than in the previous financial year to March 31 2012.

Ryanair’s successes raises all sorts of questions as to how and why Ryanair is so despised in Ireland.
O’Leary’s success to date has been due partly to his non-conformist behaviour, his willingness to confront instead of cosying up to the powerful, to say it as he sees it rather than to sugar-coat, his ability to see opportunities where others see only risks.
This has made him many enemies.
He and his company are not without their faults it should be said. Many have good reason to complain about standards of creature comfort for passengers on flights, the location of some airports used by Ryanair, the loading of extra charges for simple things like baggage and the general attitude of the airline towards customer complaints, be they legitimate or not. Flying Ryanair is not for everyone.

BUT as many as 80 million passengers each year like the Ryanair approach; it works despite increased fares (up by about 8% in recent times as pre-booked seats in a form of business class are introduced) and a perception that every “extra” comes at a hefty price. It is perceived as cheaper than rivals, the services have an excellent safety record and it is highly probable that you will reach your destination on time. It is all about getting from A to B, safely, on time and at a reasonable price.

Ryanair is motivated by self-interest but very few businesses aren’t. But that self-interest is governed by a need to give customers what they want, which is what Ryanair clearly does well.