Those who remember the first time

Ryanair

(RYAAY) - Get Report

was

mentioned in this space -- in February 1998 -- get a gold star. Those savvy enough to invest in the airline's ADRs back then -- and hang on for the ride -- got an even bigger prize: a cool 240% return.

The airline run by that wild and crazy Irishman Michael O'Leary has a lot of sparkle in a sector that's otherwise lost its luster. Last week alone, the airline's ADR shot up 36% on the news that Ryanair is buying more planes and upgrading its Web site. The stock also got a boost from the news that it would be included in the European

Dow Jones Stoxx

index, effective March 20.

Ryanair's knock-out performance -- a year-to-date gain of about 57% -- comes in an environment where the best performance of a major carrier in the U.S. for the same period of time is a paltry 12% -- -- by

Southwest Airlines

(LUV) - Get Report

. And in Europe, almost every major airline is crying the falling-earnings blues.

That's not to say that Ryanair stock hasn't had a few wobbles over the past two years. When

British Airways

(BAB) - Get Report

announced it was going to start a low-fare airline within an airline (an idea we still think was ill-advised), shares of Ryanair took a hit as investors across the pond worried that big, bad British Airways would crush O'Leary's tiny airline.

But it didn't happen.

In fact, on those routes where Ryanair and British Airways'

TST Recommends

Go

airline compete, Ryanair has a higher market share. And in those markets where British Airways, Go and Ryanair compete, Go seems to be cannibalizing British Airways' traffic, leaving Ryanair with the biggest market share.

But the best part of Ryanair's performance is its cost per available seat mile, which is about 32% less than that of the average European airline. By comparison, Southwest Airlines operates at about a 24% cost advantage to other U.S. domestic airlines.

Shades of Southwest?

It's easy to see Ryanair as the Southwest of Europe. The concept behind the airline is very similar, and CEO O'Leary's aversion to debt, his obsession with keeping costs low and his promise to maintain a predetermined level of growth should sound familiar to Southwest investors.

O'Leary also likes to wear jeans, leather jackets and a

Yankees

baseball cap with the brim in back to analyst conferences -- a particularly stellar quality in our book. (Any resemblance to the offbeat antics of Southwest CEO Herb Kelleher is probably intended.)

Oh, and yes, the airline flies only one type of aircraft, the

Boeing

(BA) - Get Report

737.

Looking forward, we see only fields of green shamrocks for the airline. Operating costs will stay at current levels, if not decline, because Ryanair's new 737-800 aircraft are much more efficient. As for fuel -- most airlines' biggest headache these days -- Ryanair has all of its fuel requirements hedged through December of 2000 and 30% of its needs for fiscal 2001. In addition, the airline is virtually debt-free and its cost of depreciation is on track to hit zero on its older 737-200 aircraft.

All of this suggests that the airline should be able to keep its annual pretax profit margin in the 22% to 26% range, despite the costs associated with an annual growth rate of more than 20%. Earnings should continue to grow at around 25% annually.

Until Thursday, the airline was sitting on about $246 million in cash and had long-term debt of approximately $125 million. However, because Ryanair owns all of its aircraft, there is no off-balance-sheet debt with this airline.

On Thursday, the airline completed a planned sale of 4.3%, or 14.3 million shares of the company, a placement aimed at institutional investors in Europe. The company, which would like to replace some of its older 737-200 aircraft with newer "used" models, will use the bulk of the offering's $110 million proceeds to bolster its aircraft purchase fund and substantially upgrade its Web site.

Did I mention that I like this stock?

Holly Hegeman, based in Barrington, R.I., pilots the Wing Tips column for TheStreet.com. At time of publication, Hegeman held no positions in any securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. You can usually find Hegeman, publisher of PlaneBusiness Banter, buzzing around her airline industry Web site at

www.planebusiness.com. While she cannot provide investment advice or recommendations, she welcomes your feedback at

hhegeman@planebusiness.com.