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Ryanair SWOT analysis – Michael O'Leary's maniacal focus on being the lowest cost producer

Analysis

Last week's 3Q earnings report from Ryanair saw a 21% increase in net profit, with passenger numbers up 3% and average fares up 8%, partly offset by a 4% increase in ex-fuel costs per passenger. The company raised its net profit target for the year to March 2013 from its previous range of EUR490m-EUR520m to a new figure of "close to EUR540m", 7% up on last year.

Yet again, Ryanair, now Europe's leading short haul carrier, is performing strongly in times of economic weakness. The old days of growth at any cost have been replaced by a more measured approach to expansion, but it remains Europe's most profitable airline through a continued, almost maniacal, focus on being the lowest cost producer in its market.

It is no exaggeration to say that Ryanair has reinvented short haul air travel in Europe. But how does Ryanair achieve its cost advantage and is it sustainable? What is the outlook for its passenger growth rates over the medium and long term and when will it place a new aircraft order? And just why does Michael O'Leary so badly want to buy Aer Lingus?

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