Ryanair to Double in a Decade
This article has been adapted from Fool U.K., our sister site across the pond.
In an interview with the Financial Times, Michael O'Leary, chief executive of Ryanair (ISE: RYA) , has outlined plans to nearly double the size of the company's fleet by 2021.
Ryanair is looking to buy between 200 and 300 new planes to add to its current fleet of 300, and to expand passenger numbers from the current 70 million a year up to 130 million over the next decade. O'Leary told the FT that he is looking to buy planes cheap, and is in talks with U.S. maker Boeing (NYS: BA) , and also with China's Comac and and Russia's Irkut.
Chinese and Russian planes? One must wonder if the canny gentleman is throwing them up as potential competition to try to get a better deal from Boeing -- after all, Ryanair's current fleet is all-Boeing, and maintaining fleets from two different makers would undoubtedly increase some costs.
North and East
Future expansion is likely to be headed northward and eastward, as O'Leary told us Ryanair has opportunities to spread its operations into Scandinavia and Eastern Europe -- which comes after the company's recent expansion into Southern Europe, particularly Italy and Spain.
Will Ryanair win new converts to its way of operating in its planned push into new territories? Well, customers here in the U.K., while liking Ryanair's low prices, aren't too enamored of the tricks and twists the company keeps introducing in order to charge for as many extras as it can, and don't like the hoops they have to jump through to get their bum on the seat at the actual advertised price.
Fellow Fool writer Maynard Paton observed in July that passenger growth was slowing, and that investors appeared little happier with the company than passengers -- with the time it took to pay its first dividend being a sore point.
Ahead of the competition
Since then, we've heard of new competition about to hit the European skies, with Sir Stelios Haji-Ioannou, the founder and biggest shareholder of easyJet (ISE: EZJ) , announcing plans to launch a new airline, FastJet.
With Stelios' biggest beef with easyJet being his opposition to the company's planned expansion and his desire for shareholders to start seeing some decent returns instead, is Ryanair's pursuit of the same path set to derail investor confidence, or will it help the market-leader gain an unassailable lead over its rivals? And will it cost extra to use the toilet on the new routes?
It's hard to say, but if I had to choose as an investor, I'd rather hold shares in an airline that pays decent steady dividends -- though in reality, airlines are just too unpredictable for me and I steer clear of them.
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