Ryanair's Current Challenges Create a Long-Term Opportunity
If you're a long-term investor, you're not short of reasons to avoid the commodity-type and capital-intensive airline sector Warren Buffett once qualified as a "death trap". Ryanair (NASDAQ: RYAAY), the top European carrier by passengers, is experiencing the typical industry challenges. Because of the current airline overcapacity in Europe, fares are declining, and higher costs are hurting its profits, while other events such as the delays with the delivery of Boeing 737 MAX planes will impact the company over the medium term. But Ryanair's current challenges actually create a long-term investment opportunity.
Image source: Ryanair Holdings.
Oversupply in the European airline market translates into lower prices. During the last quarter, Ryanair reported a drop in its average fare by 6%, and the trend isn't specific to Ryanair. Its low-cost competitor easyJet (LSE:EZJ) expects revenue per seat to decrease over the next months.
Source Fool.com
