Friday 19 December 2014

O'Leary to pilot Ryanair for another five years

Kari Lundgren

Published 14/05/2013 | 05:00

MICHAEL O'Leary plans to stay on as the head of Ryanair for another five years while admitting that he may need to change his management style.

The 52-year-old airline boss, who has turned Ryanair from a tiny Irish airline into one of global aviation industry's great success stories, has often claimed in the past that he would retire "in a few years".

Now, those plans seem to have been put on the long finger as Mr O'Leary prepares for the possible collapse of major carriers such as Air France-KLM.

Mr O'Leary said Ryanair may need to shift away from his idiosyncratic management style that's seen him deployed as a marketing tool, courting negative publicity as well as positive through talk of standing zones and pay toilets on planes to project the brand at minimum cost. The carrier has an annual marketing budget of just £4m (€4.7m), he said.

"There's going to be a time over the next few years to ease me out and try to change the image of Ryanair away from being somewhat cavalier, that we don't care," he said. "I think we need to soften those sharper edges of my personality."

Mr O'Leary's announcement comes weeks after Ryanair said it will boost the fleet to more than 400 jets by 2018 and double the company's €8.65bn market value over the same period. That could pave the way for a shift into low-cost transatlantic flying as demand for wide-body planes eases, making them cheaper, he said.

He said Ryanair would have found itself with long-haul routes had it succeeded in its latest bid for control of Aer Lingus. Ryanair won't sell its remaining 30pc holding, he added.

"If we were forced to sell down our stake in Aer Lingus, who would we sell it to?" he asked, adding that while the Ryanair board would consider a "reasonable or profitable" offer for the 30pc holding, "nobody wants to buy it".

Shares of Ryanair have posted a 110pc rise since May 2008 while shares in Air France-KLM, Europe's biggest airline, have slumped 63pc over the past five years and Lufthansa shares have declined 6.1pc.

"There's going to be a push for the legacy carriers to walk away from the loss-making, short-haul business, handing over more and more market share," Mr O'Leary told Bloomberg. "The rate of change is going to speed up. The next five years look very interesting and exciting and therefore there is no reason for me to leave."

Flag carriers

"The problem with all the flag-carrier airlines is they're ultimately doomed to failure," he said. "They are doomed to fail because they're not really committed to low fares."

Only a handful of short-haul routes feeding profitable long-haul services will survive even at the biggest operators, while the likes of SAS and LOT Polish Airlines may be forced into a deeper retrenchment or collapse, he added.

Last year saw the failure of Barcelona-based Spanair and Hungary's Malev, plus takeovers including IAG's purchase of BMI, the second-biggest slot holder at Heathrow.

"We've re-invented the European airline industry away from this failed '50s and '60s model where you had to be rich to fly," he said in the interview. "And what we're going to do in the next five years is going to be even more revolutionary."

The Mullingar resident said he retains an interest in establishing a long- haul discount airline that would ferry passengers between five or so major European cities and about 10 in the US, spread evenly between the east and west coasts.

The airline would operate under a different brand and feature a business class similar to that of Richard Branson's Virgin Atlantic, but with a less costly and more basic experience in coach. Start-up costs could be as low as £50m (€59m), plus fleet expenses.

"We're waiting for a downturn in long-haul aircraft values," he said. "If you had £10 or €10 air fares in economy you'd be unbeatable. I'm amazed none of the transatlantic carriers have really targeted that market." (Bloomberg)

Irish Independent

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