Saturday 22 September 2018

Analysts predict Ryanair rebound after O'Leary's annus horribilis

Airline boss voted second-worst performing chief executive behind PTSB chief Masding in our annual survey of analysts

Ryanair’s Michael O’Leary Photo: Bloomberg
Ryanair’s Michael O’Leary Photo: Bloomberg
Gavin McLoughlin

Gavin McLoughlin

Irish analysts are tipping Ryanair to bounce back from its current woes in 2018, according to the annual Sunday Independent analysts survey.

After losing billions in shareholder value in recent weeks, in the midst of a turbulent row with pilots, the company is being tipped to be the best-performing Irish plc share next year.

Chief executive Michael O'Leary has had an annus horribilis and was voted the second-worst performing chief executive of an Irish plc in 2017. In last year's survey he was voted the second best-performing boss behind David McCann of Fyffes. The airline admitted to a disastrous error in scheduling pilot leave, which led to a glut of pilot holidays towards the end of the year and the cancellation of thousands of passenger journeys. To solve the problem, the airline said it would scale back its growth plans.

O'Leary then made the decision to recognise trade unions for the first time - though he still maintained he would not negotiate with pilots from rival airlines. He averted a strike from Irish pilots, but he couldn't stop German pilots announcing a four-hour strike on Thursday.

Permanent TSB’s Jeremy Masding was voted the worst-performing chief executive of an Irish plc in 2017 by the analysts taking part in our survey. Photo: INM
Permanent TSB’s Jeremy Masding was voted the worst-performing chief executive of an Irish plc in 2017 by the analysts taking part in our survey. Photo: INM

Investors will be watching closely to see how the industrial relations environment evolves in the New Year.

Respondents to our survey - who were granted anonymity to encourage candour - voted Permanent TSB boss Jeremy Masding as 2017's worst performer. The bank's share price has dropped from around €2.70 to €2.20 in the space of a year and it remains weighed down by a large amount of non-performing loans (NPLs). Half-year pre-tax profits more than halved year-on-year in 2017. A further update on the NPL strategy is due in the first quarter. PTSB, which is 75pc State-owned, is also projected to be the worst-performing Irish stock in 2018.

Masding made headlines this year for a candid interview with the Irish Independent, in which he railed against what he perceived as "sycophancy" from the Irish Government and media towards foreign banks.

"If Air Force One arrived here from Spain, you'd all be there, in the way you all are, sycophantic and throwing flowers and giving them all Guinness ... well, it is sycophantic. When I look at the way the Government treats foreign banks here, when actually I'm one of the biggest employers in Ireland, it makes you feel undervalued," said Masding.

Gene Murtagh. Photo: Gerry Mooney
Gene Murtagh. Photo: Gerry Mooney

Dalata boss Pat McCann and Kingspan chief executive Gene Murtagh were tied in the vote for best-performing chief executive of an Irish plc.

Dalata, Ireland's biggest hotels group, continued to perform strongly this year, adding more hotels to its portfolio and growing revenue per available room by almost 10pc this year in Ireland. Half-year pre-tax profit was up 80pc this year and the share price is up more than a third.

Kingspan shrugged off the Brexit vote with a record performance in its 2016 financial year, and this year it's projecting trading profit to grow around 10pc.

Its share price is also up more than a third, despite unwelcome headlines about the use of a small amount of its material in the Grenfell Tower, the London apartment block that was the site of a horrific fire in the summer.

Pat McCann. Photo: Tony Maxwell
Pat McCann. Photo: Tony Maxwell

Kingspan said the material was used without its knowledge as "part of a combination for which it was not designed, and which Kingspan would never recommend". "Kingspan is very confident that, properly installed and specified, our products deliver safe, reliable and energy-efficient insulation solutions," the company added.

Respondents to our survey were near-unanimous in their optimism for the prospects of the Irish and global economies in 2018. Most projected growth in the region of 3-4pc for both.

Technology - particularly the so-called FAANG stocks (Facebook, Apple, Amazon, Netflix and Google) - was heavily tipped as a sector to watch, as was oil and gas, and fintech.

We also asked our respondents to project what one bitcoin would be worth at the end of 2018 - responses ranged from $100 to $27,000.

Sunday Independent

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