Ryanair's O’Leary says outlook pessimistic but investors don’t buy

The airline has reported record results despite a year dogged by scandal

Ryanair: Flying high despite a tough year (Wiki Commons)

“On the pessimistic side of cautious” is how Ryanair’s ever quotable Michael O’Leary views its prospects.

When a chief executive puts out a statement like that it’s usually enough to have investors on the pessimistic side of panic.

“Help! Help! What’s he seeing that we’re not?”

Yet Ryanair shares reacted with equanimity. The market isn’t buying what looks like an attempt to manage expectations by Mr O’Leary and why should it?

Consider what happened to Ryanair in the past year.

The low-cost airline created a huge scandal after having to cancel thousands of flights because of a lack of pilots. It communicated it terribly and upset just abut everyone in the process: passengers, pilots and regulators.

It has since had to make nice(ish) with the fly-boys-and-girls’ unions, rather than snarling at them.

A lesser, though still notable issue was created by a new bag-check in policy (it might be changed because it’s creating problems at peak times) that’s nettled some.

Oh and there’s Brexit. Don’t forget Brexit. Mr O’Leary is implacably opposed and has taken to regularly trolling the UK government over the latter’s stupidity.

I have to admit to enjoying that. If there’s one thing Mr O’Leary is good at besides business it’s getting up people’s noses. When that’s deployed against the witless Brexiteers in Westminster it’s kind of fun. Most companies fight shy of doing it for fear that their Brextremist customers will take their Daily Telegraphs and storm off in a huff. But they seem to be sticking with Ryanair just like everyone else.

The airline’s full-year results show a company that is flying high, higher than it has ever flown. Net profit for the year to the end of March rose by 10 per cent to €1.45bn (£1.27bn), which is a staggering performance when you consider the turbulence through which Mr O’Leary has been flying.

How’s he do it?

It’s actually not as hard as it looks. Ryanair said its headline fares declined by 3 per cent. That’s the key metric here.

Customers look at the numbers they are quoted and they forget the cancellation scandal, the hassle with the bags, Ryanair’s genius at finding ways to claw back cash from them, the miserable experience some people have when flying with it. They get out their credit cards. And they book. Mr and Mrs Smith, Colonel Blimp the Brextremist, and everyone else on Acacia Avenue, it doesn’t matter. No wonder Ryanair has felt able to describe itself as the world’s favourite airline.

There are alternatives to flying with it, especially if you’re willing to pay a bit more. But most aren’t.

This helped the company to quote a load factor of 95 per cent, a feat some airlines would regard as prima facie evidence of witchcraft.

Sure the company is now having to talk to pilots’ unions, and while it’s making the usual bellicose noises about facing down anyone trying to fight for workers, labour costs are rising. So are fuel costs.

Ryanair also says it doesn’t have much visibility when it comes to fares and summer bookings and such like.

But would you really want to bet against it flying over any clouds it might encounter?