Reduced Profits At Ryanair
In a world where company management invariably puts a positive spin on any bad news they have to release it was refreshing to read of the chief executive of Ryanair, Michael O’leary being bluntly honest. He told us that he expects things to get tough over the next year or so. He expects profits to be reduced at Ryanair by up to 50% because of the high price of fuel and reduced consumer demand. This follows a drop in profits of 27% in the last quarter from October to December 2007
The cheap flights available from airlines such as Ryanair have been a significant factor in the growth of air travel over recent years and it has become commonplace to fly to Prague, Amsterdam or Spain for stag nights and short breaks and it raises the question of whether the sudden growth in cheap air travel was just a bubble and if, as fuel supplies run down and prices rise, the growth in air travel be justified or maintained.
The remarkable growth in air travel has been used to project large numbers of people travelling in the future and been used to justify the need for additional runways at UK airports. Those figures may be looking less certain now.
However else it can be interpreted it is clearly yet another sign of a slowdown in consumer spending as the credit squeeze bites.
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Sound like recession is upon us. Oh well, will recover eventually. In the mean time shorting stocks should be fun.
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