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Still taking the Mick with mile-high profits


Ryanair chief Michael O’Leary dresses as superhero side-kick Robin in a replica Batmobile vehicle, as he announces the recent partnership with CarTrawler. Photo: Matthew Lloyd/Bloomberg

Ryanair chief Michael O’Leary dresses as superhero side-kick Robin in a replica Batmobile vehicle, as he announces the recent partnership with CarTrawler. Photo: Matthew Lloyd/Bloomberg

Ryanair chief Michael O’Leary dresses as superhero side-kick Robin in a replica Batmobile vehicle, as he announces the recent partnership with CarTrawler. Photo: Matthew Lloyd/Bloomberg

Ryanair is on a roll. It isn't the only international airline set to announce a record profit for this year, but its incredible rise has seen it bask among the elite of global aviation. It is the most profitable airline in Europe and the largest carrier of international passengers in the world.

During the week, chief executive Michael O'Leary announced that Ryanair was likely to make around €250m more in profits this year that it previously thought.

If he delivers, the airline that Aer Lingus offered to buy for just £25m in 1993 will make a profit of €1.2bn. That is €3.2m per day.

Ryanair will join the tiny club of just three other airlines in the world to carry more than 100m passengers per year.

If Ryanair is on a roll, then so too is O'Leary. His shareholding increased in value by €59m in a single day on the news, and it is now worth around €700m. Given that he already cashed in more than €300m worth of shares in the past and received substantial dividends, O'Leary is now firmly in the Irish billionaire club.

There are many surprising things about the Ryanair story but perhaps most striking are the many ways it achieved this extraordinary success in spite of itself. On paper, Ryanair broke all of the rules of how small Irish companies can succeed and should have been doomed to fail.

It was completely anti-establishment, anti-trade unions and went out of its way to fight the State, from transport ministers and civil servants to State companies like the old Aer Rianta.

It paid a student to build its website on the cheap. It not only offended its customers but seemed to take pride in doing so.

It was successfully sued by its one millionth passenger in 2002, who said the airline reneged on a prize of free flights for life.

It even charged disabled passengers at some airports £18 (€25) for the use of a wheelchair.

To the outside world, the O'Leary media persona, which developed after the airline floated on the stock market, was one of cheap, attention-grabbing publicity.

He created newspaper advertisements of former transport minister Mary O'Rourke in the bath. He did photo shoots dressed up as everything from a bishop and a tank commander to a leprechaun. He posed gyrating with toy Ryanair planes at press events.

There were his famous public pronouncements which became the subject of a book called 'The Little Book of Mick'. Among them were: "Germans will crawl bollock-naked over broken glass to get low fares." On passengers who forget to print boarding passes, he once said: "We think they should pay €60 for being so stupid."

Good for getting attention but not great for building credibility. His style attracted huge criticism and admiration at the same time.

Ryanair flew to secondary airports miles away from large cities. Its flights to 'Oslo' landed at Torp, 75 miles from the Norwegian capital. Services to Frankfurt (Hahn) arrived a similar distance from the German business centre, and its two Stockholm routes landed 60 and 55 miles from the city.

The truth was that none of these things mattered to the overall business.

They all attracted criticism and some unfavourable court rulings, but as long as O'Leary could keep delivering cheap flights, on time and safely, passengers would fly with him.

By delivering on its promise of low fares, the airline re-invented air travel along the way. It did away with the need for travel agents by redefining how flights were priced. It pioneered quick turnaround times.

It shamelessly charged extras for everything, from luggage to assigned seating, creating a new business model in the process.

Ryanair demolished the old-world snobbery of flying in luxury and paying too much for it. Instead of quiet comfort, the airline prided itself on in-flight announcements selling things.

"Anyone who thinks Ryanair flights are some sort of bastion of sanctity where you can contemplate your navel is wrong," O'Leary once said.

Ryanair was driving change in European aviation, while also benefiting from the wider social changes taking place across the continent. Eastern Europeans wanted to travel west. Western Europeans wanted to travel a lot more. The Ryanair model made a lot of this possible.

O'Leary, the man who was happy to play the buffoon in publicity shots, was becoming one of the most influential people in world aviation. Yet, ironically, he doesn't really enjoy foreign travel.

His briefings to analysts and brokers in London at results time are standing room only. He was building a huge Irish-based multinational business.

Most of the time, he appeared to be one step ahead of everyone else. After insulting Aer Lingus as a rubbish business for years, as soon as it was privatised in 2006, he shocked the market by buying up 20pc of it and launching a takeover bid.

He got around Dublin traffic by buying a taxi plate for his car and having a qualified driver, which allows him to use the bus lanes.

He has joked, that not only is it legal, but his is the only fully legally-compliant taxi in the city.

But he has got things wrong too. His belief that people would pay money for in-flight entertainment on Ryanair flights was hopelessly wrong.

He just about got his money back on the Aer Lingus investment.

His 'treat them mean and keep them keen' approach to customers got the airline so far, but Ryanair has had to change.

Its old approach got it to 75 million or 80 million passengers per year, but Ryanair couldn't double that, as it plans to, without going after more business customers and families.

It wants to fly to more large primary airports in places like Italy, France and Germany.

People were shocked when O'Leary told an AGM in 2013 that the "abrupt" culture needed to change. It was seen as his culture, so he would have to change. At first, it looked like just another publicity stunt because we had heard everything else before.

Providing allocated seating and changing the website from 17 clicks to just seven to book a flight had become necessary.

EasyJet had done it. Ryanair announced two profit warnings in two months in late 2013 and it changed direction.

Ryanair hasn't looked back. Its profits for this year will be double what they were in 2013.

Ruthlessness, cost control, aggressive marketing and a willingness to adapt have played big parts in the success of Ryanair. And O'Leary will always have a few more surprises up his sleeve.

Irish Independent