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A Perfect Storm For Being Long Ryanair

Published 04/11/2014, 13:43
Updated 09/07/2023, 11:32
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Historically famous for being customer adverse, this protocol, seemingly led by outgoing CEO Michael O Leary was amazingly popular. The prospect of extremely cheap flights to destinations that would have normally been expensive with other carriers seem to be the main catalyst for Ryanair (LONDON:RYA)'s popularity.

However, the cracks in this model started to show over a year ago when various allegedly unfair customer service issues arose with regards to unfair costs of checked in luggage, the cost of changing the date of a flight or general use of its customer service.

In addition to this, rival budget airline Easyjet (LONDON:EZJ) started to introduce allocated seating and extra leg room with a strategy that seemed to resonate with better customer service. Since the start of 2014 the Ryanair brand has under gone transformation eliminating policies which were deemed unfair, allowing carry-on luggage and, to quote the eloquent Mr. O'Leary. “ to stop unnecessarily pissing people off.”

Figures released yesterday show this has been a huge success, with a full year net profit coming in at €750 million versus an expected €682 million from analysts.

Ryanair Daily Chart

In addition to these impressive set of figures, the stock seems to be in a perfect storm: Having technically broken out of a narrow band of resistance from €6.50 to €7.70 for the past year, the upward trend can now push on to at least €9.40.

Finally, as is always important to airlines, the cost of fuel has declined. WTI is down an amazing 17% alone this year, which should filter through to the next set of figures: a prefect storm for being long.

Disclaimer: The views and content expressed above are the views of the author and do not reflect the views of Ayondo Markets. This service is for information only and should not be interpreted as investment advice or any recommendation to enter into a financial transaction.

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