My first airline investment ever. For investors, aviation is an excellent hunting ground for monopolies: from aircraft parts (Transdigm), to engines (RTX, GE Aerospace), the duopoly of Airbus and Boeing, and the most obvious local monopoly of all — airports.
But airlines as a group are a terrible investment. Warren Buffett once said that from an investor’s standpoint, the Wright brothers’ invention should have been shot down. Buffett got his hands into airlines repeatedly anyway, and mostly failed.
I believe Ryanair has built a great position among them. “When the tide goes out you can see who was swimming naked” — nowhere did this make more sense than in European low-cost carriers. Remember Air Berlin, Lauda, Norwegian? Countless airlines have tried the model and failed. Nobody has executed it as ruthlessly as Ryanair.
€2.2bn profit last year. 80% of fuel hedged until March 2027. If an airport gets too expensive — Germany, for instance — Ryanair simply leaves. And yet it is the largest airline in Europe, by passenger numbers, fleet size, and city pairs served. The share is relatively cheap by its own history.
At least it makes sitting in an overheated plane on the tarmac more bearable. I paid 26 euros for my flight today.
(Not investment advice.)