Ryanair (NASDAQ:RYAAY), headquartered in Ireland and the leading ultra-low-cost air carrier in Europe, was a large detractor from performance for the quarter, returning -14%. During the quarter, the company announced underlying 2019 fiscal-year results that were below expectations on the back of a weaker revenue environment. Passenger revenue was up only 0.6% as passenger growth of 8% was nearly entirely offset by falling yields with pricing down 6%. Unfortunately, fuel prices are up nearly 20%, but price discounting from higher cost competitors has prevented Ryanair from passing on these higher fuel prices to passengers. We believe that increased competition in this industry will result in consolidation, which will bring a more rational pricing environment to the market place. We think Ryanair continues to be extremely well positioned given its structural cost advantage compared to its competitors and it maintains a strong balance sheet that enables the management team to take a long-term approach toward creating value. We support management’s growth aspirations and believe the company can continue to gain market share over its higher cost peers, though in the short term its earnings could remain volatile.
From David Herro (Trades, Portfolio)'s second-quarter 2019 Oakmark International Fund commentary.
