Ryanair in severe turbulence, but issues don’t look terminal
Comment Martin Flanagan
Some have wondered whether this is Michael O’leary’s “Gerald Ratner moment” at Ryanair – a corporate cock-up that it proves impossible to crawl out from under. I doubt it.
Crucially, former UK jewellery king Ratner mocked his own products in a pub- lic speech, infamously calling a decanter “total crap”. To many customers, it showed Ratners was trading in bad faith. By contrast, O’leary and Ryanair’s mistake is largely administrative. Ryanair’s severe mismanagement of its pilots, with too many due holiday before this December, is extremely irritating and inconvenient for hundreds of thousands of passengers.
The airline has just axed another 18,000 flights for a further 400,000 passengers travelling between November and March 2018, less than a fortnight after it cancelled up to 2,100 flights affecting 315,000 customers. But if strong remedial action is taken many businesses recover from major operational failings. O’leary’s weak spot will be if the Civil Aviation Authority decide that Ryanair has also breached competition laws.
It is alleged the company falsely claimed it did not have to re-route passengers on other airlines, and stopped short of providing details of its obligations to refund additional expenses incurred by passengers as a result of cancellations and re-routings.
That would be a bigger black eye reputationally for O’leary. But this still looks more like a severe setback rather than terminal damage. proved with the £10.7m share sale by Boohoo’s joint CEO Carol Kane on Wednesday, the day of the online fashion retailer’s interim results. The problem is that although the sale coincided with bullish revenue projections by Boohoo, the City has focused on the pressure on the firm’s profit margins instead.
Boohoo guided to future group margins between 9 and 10 per cent, against 13 per cent in the first half of 2016. The fall in the shares yesterday suggests investors might think, taken with the £80m share sale by other senior management earlier this year, that ambitious corporate expansion, margin/pressure and directors cashing in some chips are unfortunate bedmates.