O’Leary apologises for Ryanair’s poor performance and slump in share price

MICHAEL O’LEARY has apologised to shareholders in Ryanair for the poor performance of the airline’s share price this year.

CEO Mr O’Leary said he was disappointed the share price had not recovered since the carrier issued a profits warning in January and said management would be working hard to build up confidence in the shares.

But he said this would take time as the aviation sector was out of favour of investors.

“It is extraordinary at the moment. Our price multiple is 15 times earnings whereas South West Airlines is 25 times earnings. South West’s margins are less than ours, their growth is half of ours, so why is South West more valuable than Ryanair?

“There is no point in worrying about Ryanair’s share price in the short-term when fuel is hopping around at $40 to $45 a barrel.

“No one is going to invest in airlines when there is such uncertainty about fuel prices. Our concern, though, is about the underlying performance. The growth is still impressive, the profit is still very impressive and the balance sheet is stuffed with cash.”

Shares in the airlines have plummeted by nearly 40% since January when it warned profits for 2003/2004 would be lower because of intense competition. The carrier was forced to cut ticket prices to fill seats by more than expected, a move which wiped €1.8 billion from its value.

Mr O’Leary reiterated his view that this would be another tough winter for airlines. He said fares would fall once again across the industry by up to 20% and the surge in oil prices would see some of its competition go out of business.

“If the price of oil went to $60 a barrel, we would still be profitable.”

He urged Government to move on plans to build an independently-owned second terminal in Dublin.

He said if this happened Ryanair would launch a major expansion out of Ireland, basing four new aircraft at Shannon, bringing in one million new visitors and up to 10 planes at Dublin airport.

“I am hopeful that the new board of Dublin airport ... will be more business minded, more consumer minded and will do something about the appalling mess at Dublin airport.”