You just gotta love Ryanair
Fortunately for investors, the company has the track record to more than justify its outspoken tendencies. In an environment that has been brutal for air carriers, Ryanair posted 24% revenue growth (including 39% growth in ancillary revenue) and ex-goodwill operating margins declined only modestly despite a 50%-plus spike in fuel costs. As a result, the company managed a 19% increase in profits excluding goodwill.
I'm not sure there's much to say about Ryanair that hasn't already been said. The company continues to do a phenomenal job of controlling costs (particularly labor costs), and the company's cost structure allows it to offer incredibly low fares. At an average fare of 41 euro, Ryanair is well below its competitor easyJet and not even in the same arena as BritishAirways
I also like the fact that Ryanair management seems to understand that the airline business is actually a business -- something that I often wonder whether U.S. airline CEOs understand. As such, it's always on the prowl for new revenue sources or new ways of containing costs.
For instance, while Ryanair decided to strip out the in-flight entertainment systems that it was testing, the company is still optimistic about the potential of in-flight gambling and will explore this again in the future. Additionally, Ryanair had hedged 75% of its fuel needs for next winter. Personally, I'm amazed that more airlines don't hedge their fuel costs since it is a large part of their operating expenses.
That said, I'm afraid that Ryanair may be marking a top in oil prices. If I were to complain about anything regarding Ryanair management, it's that it generally isn't very good when it comes to forecasting oil prices. So, if Ryanair is now hedging its fuel exposure, you can bet that oil prices are set to soon tumble.
Teasing aside, there's much to admire about Ryanair. They've taken the Southwest Airlines
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).