Hidden fleet value makes Ryanair tempting target

By Paul Hoskins -Analysis

DUBLIN (Reuters) - Ryanair shares have been hammered as fuel costs mount, but investors may be missing a trick, given hidden value in a growing fleet that could make it a tempting bid target for anybody who can raise the funds.

Europe's biggest low-cost carrier has seen its stock dive 60 percent in 12 months, meaning one of the world's most profitable airlines is now worth 3.8 billion euros ($6 billion).

Investors are wary of its lack of protection against record oil prices, but two factors set it apart from many rivals.

Ryanair has orders and options to buy dozens of Boeing planes over the next four years at prices so far below the going rate that the difference in value alone could net any buyer 2.3 billion to 2.6 billion euros ($3.6-$4.1 billion).

Secondly, a highly profitable Ryanair armed with a cash pile of over 2 billion euros ($3.2 billion) is well placed to emerge bigger and stronger from the increasingly inhospitable swamp that has seen several smaller U.S. airlines come unstuck.

Chief Executive Michael O'Leary has often boasted that Ryanair is the fittest in a Darwinian battle for survival, but analysts say he is worth listening to, given his record and his 4 percent stake in the airline.

"Even though people don't like him sometimes being bombastic, they recognize that he tends to call things as he sees them," said Goodbody aerospace analyst Joe Gill.

O'Leary made some pretty smart calls in previous downturns.