Threadneedle sticks by Ryanair through negative headlines

Columbia Threadneedle manager Mark Nichols has played down Ryanair’s recent negative headlines, as the low budget airline reports an increase in profits in the last six months.

Ryanair shares rose 5 per cent this morning on news profits were up 11 per cent to €1.3bn in the six months to the end of September.

The airline has made headlines for a raft of flight cancellations announced in September.

But Threadneedle European Select fund manager Mark Nichols says they have stuck with the Irish company through its woes.

He says negative headlines associated with consumer companies like Ryanair can persist leading some investors to over emphasise the impact on the company.

“Ryanair isn’t a stranger to that and this isn’t the first time they’ve had negative headlines,” Nichols says.

Despite the positive reaction to today’s results, Ryanair profits fell 2 per cent in the latest quarter to €895m.

Hargreaves Lansdown senior analyst Laith Khalaf says it’s too early to tell whether there will be any lasting effect from the flight cancellations, but reckons ongoing reputational damage is unlikely if it can prevent the issue from arising again.

The numbers show little signs of weakness, but the reporting period only covers the start of the problems encountered by Ryanair, so further costs could arise,” Khalaf says.

Customer numbers rose 11 per cent over the six-month period to 72.1m and revenues were up €4.4bn.

The Threadneedle European Select fund, which is also managed by Dave Dudding, has engaged with Ryanair over its pilot scheduling mishap, which has been behind a number of cancellations.

“We think they’ve responded in a fairly grown up way. Their customer base will continue to be there because this is an important provider for low-cost travel,” Nichols says.

“You can have a nicer holiday if it’s cheaper to get to your destination.”

Southwest in the US has around 25 per cent market share, while Ryanair is 13 per cent, providing room to double, Nichols argues.