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Clearing a flightpath to European domination
Robert Lea03.11.08
IF Ryanair made €215 million in the half-year to the end of September, and its boss Michael O'Leary is predicting the company will only break even for the full financial year, the maths is quite simple: from 1 October to 30 March, Ryanair is going to lose €215 million.
Aviation is an unremittingly cyclical business.
On an annual basis, airlines aim to make as much money as possible in the spring and summer and keep losses to a minimum over the winter.
On a longer-term basis, aviation goes into a slump every seven years or so as too much capacity too many new carriers thinking they can make an easy buck upsets the fragile demand/supply equilibrium.
So is Ryanair, with its shares down 50% this year, in trouble?
O'Leary says if oil stabilises at $80 a barrel, his profits will "rebound strongly". He also says Ryanair has $2.1 billion of cash on its balance sheet.
Most airlines cannot cope with $80 oil, and they certainly do not have that sort of cash.
Many airlines will be pushed into bankruptcy or consolidation all playing into the hands of Ryanair's plan for European domination.
