Jim Armitage: Michael O’Leary’s insight remains grounded

By his foghorn standards, Michael O’Leary has gone quiet lately. Since he finally realised he had to start giving better customer service or face losing market share to more caring rivals, he’s stopped telling his punters they’re “stupid” or telling them to “f**k off” if they want a refund.

But don’t be misled. His commentary on the airline market is still the must-read for the sector. So, when he says today that higher oil prices are hurting, they are. When he says more airlines will go bust as a result this year, they will.

The thing is, while Ryanair isn’t immune from the hit to profit margins of higher fuel costs and wage rises (particularly the latter), it is the airline best able to survive them.

Its strong balance sheet means it is better hedged against the oil price than its rivals, and it remains far more cost-efficient.

In fact, thanks to its high passenger numbers, airports are giving Ryanair ever bigger incentives compared to its smaller peers.

Even when the airline’s profit margin falls, as it has done this past year, it still clears a hefty 25%. So it can still price its flights as the cheapest without jeopardising its financial position.

That’s why people will still fly with Ryanair, and why — particularly at today’s price — its shares are worth buying.