A friend of mine has often regaled me with the tale of his trip to Germany: the beautiful scenery, the historic castles, the Munich beer halls, and two days wedged in an airplane seat with nothing for entertainment but an endless cycle of the movie Bedazzled -- which he still will not watch to this day. Fortunately, Ryanair Holdings
Apparently, management at the Dublin-based company is mulling the idea of offering gaming options to passengers through seat-back consoles, in addition to the company's current pay-for-entertainment lineup, which includes movies, cartoons, and music videos. Ryanair has already placed an order for 5,000 additional consoles. The concept may or may not get off the ground, though, as the technology needed to expand the systems to include credit card-funded gambling is still in the near future. However, if rival Virgin Express can safely carry passengers on suborbital flights, then Ryanair should have no trouble finding a way for its fliers to unwind with a video poker machine.
Ryanair, Europe's answer to no-frills Southwest Airlines
Separately, the company released solid second-quarter results earlier this week. Despite a modest 3% decline in average revenues per passenger (or yields), Ryanair topped expectations by posting a 15% rise in net income to 147.6 million euros (which, incidentally, are now trading at an all-time high versus the dollar), or $188.3 million. Revenues climbed 19% to EUR 418.3 million ($533.6 million), driven by a 20% improvement in passenger volume to 7.4 million. Stronger than anticipated advance bookings have prompted management to raise its outlook from a 10% to 20% drop in yields to a more optimistic single-digit decline over the next two quarters.
After being 90% hedged against rising fuel costs (at around $28 per barrel) last quarter, the company is now expecting moderating oil prices and will remain unhedged at current levels. With the lowest-cost business model in Europe, Ryanair is better positioned than peers to absorb rising fuel costs, and has stated that it would remain profitable even with oil prices approaching $70 per barrel. Nevertheless, fuel costs totaled $79 million for the quarter, and a slight rise in oil to the $50 mark would increase costs by a projected $70 million over the second half of the year.
CEO Michael O'Leary -- never one to mince words -- predicted that fierce competition and rising fuel costs could precipitate a "bloodbath" this winter, and reduced capacity resulting from further airline casualties should only solidify Ryanair's position as the most profitable airline in Europe. Of course, a few dozen onboard casinos probably wouldn't hurt, either.
Fool contributor Nathan Slaughter is wondering whether his credit cards could survive an international gaming flight. He owns none of the companies mentioned.