It’s not been a particularly good three weeks for one of Europe’s biggest budget airlines, Ryanair, which has been in the news for all the wrong reasons over the past few days.
Already reeling from having to cancel a host of flights due to a lack of pilots the airline this week went further by extending the cancellations until March next year, in the process throwing up in the air the Christmas and New Year plans of thousands of their customers, after pilots refused to work extra days to cover the shortfall.
Despite the bad publicity the share price falls have been fairly modest in comparison to the gains seen since 2014, and it’s not hard to see why. Despite its name and brand being synonymous with poor customer service the company last year posted profits in excess of €1bn, and despite the shambles of recent days still looks on course to past similar profits this year.
It is estimated that the current chaos will cost the airline in the region of €60m in terms of compensation, a drop in the bucket in comparison to last year’s profit numbers. What is rather more difficult to measure is the intangible effect that all of this will have on the brand, but also on customer’s willingness to book with them again.
It’s one thing to appear indifferent to the needs of your customers, when your offering is the cheapest in town it’s quite another to inconvenience them to the point that they don’t book with you in the first place due to uncertainty as to whether their flight will actually leave, let alone come make the return journey.
With that in mind and reports of a dissatisfied work force as a result of the host of cancellations it is hard to see why investors should have confidence in a brand that not only treats its customers poorly but also appears to take its staff for granted.
It may take some time, but Ryanair may be about to get its wings clipped.
CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person