THE FRIDAY INTERVIEW:Michael O'Leary, Ryanair chief executive
STANDING IN his office at Ryanair HQ in Dublin airport last Friday morning, Michael O’Leary turns to greet me before rushing out the door talking into a dictaphone.
As ever, he’s a busy man.
When he returns, we discuss the Brian Cowen controversy that has been rumbling for a few days. O'Leary didn't hear the now infamous Morning Irelandinterview. "Nah, at a quarter to nine? Jaysus sake I was at work," he says while tying a lace on his runners. The Ryanair boss had "high hopes" when Cowen became Taoiseach but Biffo has been "very disappointing".
“History shows that some people get into leadership positions and they flower, and others shrivel,” he says, shrugging his shoulders in that dismissive way of his.
With that, it’s down to business, which is doing very nicely, thank you. “We’re booming in Spain, we’re booming in Italy, growing rapidly in Germany, business has never been better. In general terms, it’s been a very good year for Ryanair. We do very well in recessions.”
Ryanair is expected to post profits this year of more than €350 million.
In Ireland, however, Ryanair has been cutting routes in Dublin and Shannon, blaming soaring airport charges and an “insane” €10 travel tax.
“We don’t need to grow out of Dublin, thankfully,” O’Leary says. “You can’t cut costs and cut fares in a country that introduces a €10 tourist tax and then orders the independent regulator to approve a similar increase in the Government-owned airport fees.
“There’s no point in me ranting on about Dublin [airport]. Dublin has failed. It’s only a question now of when the Government grasps the nettle.”
That doesn’t stop O’Leary spending much of the interview ranting about Dublin airport and Irish tourism. The Mullingar man has a plan and he recently presented it to Minister for Finance Brian Lenihan at a meeting, away from prying eyes.
“We could double our traffic into Irish airports over a four- or five-year period. About six million passengers, create 6,000 jobs and add about 3 per cent to Irish GDP. It requires only two things: scrap the travel tax and slash the DAA’s fees.”
What if the Government met him halfway and reduced the travel tax to €5? “You’d still be uncompetitive with Italy, Spain and France,” he says.
Germany will shortly introduce its own travel tax. “Yes, and their traffic will now fall in the same way that Ireland and the UK has,” he says. “We will certainly close routes there and reduce the number of flights, as will most other airlines.”
In O’Leary’s mind, his plan is a no-brainer for Ireland Inc. “The sad thing is that you’ve got the world’s biggest airline sitting on your doorstep and none of them have found a way to work with us. We’re relatively simple to work with. Give us low costs and we’ll get out of the way.”
O’Leary makes it sound so easy but the reality is that it is difficult for the Government to accept his plan. How would his proposal square with the DAA’s need to service a €1 billion-plus debt related to the construction of Terminal 2, which Ryanair opposed?
And what impact would such growth by Ryanair have on Aer Lingus, still 25 per cent owned by the State?
What about the DAA and its debts? “Who cares?” O’Leary snaps back. “Having completely screwed up the development [of T2] and screwed up the finances of it, and having built a second terminal that they don’t need at six times the cost, the problem is now how do they fund it? I don’t care.”
O’Leary believes the DAA’s debt will ultimately “fall back on the State” as the airport manager won’t be able to fund its borrowings as traffic
continues to fall. He also highlights the absurdity of the regulatory regime here, which allows the DAA to increase passenger charges if traffic falls so as to recoup the costs of building T2.
So what’s the solution?
“The obvious response by the DAA would be to mothball T2 for a year or two. At least they’d save on the security and operating costs, which in a terminal building are horrendous. But that would be embarrassing for the Government, so in November we’ll open T2 and move nine million passengers out of T1 into it.”
It should be pointed out that the DAA disputes the T2-related statistics that O’Leary regularly quotes. But O’Leary drives on. “You can have €1.2 billion of debt in the DAA and be growing traffic, tourism and jobs. Or a €1.2 billion of debt in the DAA and be losing traffic, tourism and jobs. You decide.
“The great advantage for Ryanair is that we’re now the largest airline in the world. We have governments all over Europe – the Spanish, the Italians, the French – beating a path to our door saying ‘please will you grow here’.”
He claims to have just signed a deal with a European government to open four bases in that country. But he won’t say which one.
“Ah, stop. I’m not going to alert my competition to where I’m opening bases.”
Although O’Leary has described T2 as a white elephant, he has yet to see it first hand.
“We have repeatedly asked for the tour but I understand [DAA chief executive] Declan Collier is very busy guiding journalists and Christoph Mueller [of Aer Lingus] and everybody except Ryanair around it. Doubtless we’ll get to see it when it opens in November,” he says with a heavy dose of sarcasm.
Sticking with Ireland, O’Leary believes Aer Arann, which is in examinership, “will go bust . . . It’s a subsidy junkie airline that can’t make any money,” he says, in a reference to the €13 million a year Aer Arann gets for operating public service obligation (PSO) routes from Dublin to regional airports.
Pádraig Ó Céidigh, Aer Arann’s owner, has accused O’Leary of trying to put him out of business. “So I believe, yeah. Apparently we focused entirely on Aer Arann and we are the entire cause of their problems despite the fact that we only compete on one of their routes [Dublin-Cork].” Aer Arann is now pulling off Dublin-Cork and lost its Kerry PSO route to Ryanair in the last round of bidding.
“Funnily enough, I thought it was a competitive tender,” he retorts. “They still got €13 million for the other [PSO] routes and still can’t make money. The subsidies are insane.” According to O’Leary it would be cheaper to send passengers to Knock and Donegal by limousine.
As it happens, Ryanair announced yesterday that it was cutting services on the Kerry/Dublin route by two-thirds in a row with the Government over the PSO.
O’Leary has gained huge publicity in the British press of late, talking about flights with just one pilot, and charging for toilets. He insists they’re not just publicity stunts.
“Everybody continues to misunderstand. We don’t want the money for toilets. We want to get rid of two of the three toilets on one-hour flights and put in six extra seats. I’m absolutely serious about that.
“At the moment, the argument from the regulators is that six extra seats will slow passengers in an emergency evacuation. We went back and said, hang on, the two rear toilets are the big bottleneck in emergency evacuations. If you remove those and replace them with seats, you widen the aisles and the flows will be much faster. Now that’s a debating point.”
He sees no reason why, with advances in technology in coming years, a co-pilot can’t hop out and give a hand with the trolley service during flights.
“Do I think we’ll get one-pilot flights? Not in the next 10 years,” he concedes, “but I think that it’s important that we at least raise the issue and ask the question.
“Auto pilots now do most of the flying. Would you take out the second pilot? No, clearly you wouldn’t. But maybe the second pilot could be doing some of the inflight service when the auto pilot is on.”
When it comes to business and Ryanair, O’Leary could talk for Mullingar. But ask about him about Michael O’Leary the family man, horse owner and private citizen, he goes all shy. “Look, Michael O’Leary outside Ryanair is just as beloved, sensitive and caring as he is in Ryanair,” he says.
When I ask him for a couple of quotes for the factfile box with this interview, O’Leary rolls his eyes and says: “Honestly, I lose the will to live with all that chatty bullshit.”
He claims not to have read any of the books written about him. “I genuinely don’t care what people say about me.”
I ask if he’d like another full-time executive role after leaving Ryanair “in a couple of years”. Or if he might get involved more in breeding (I meant horses)?
“Don’t know, don’t care,” comes the clipped response. “My fourth child is on the way so my breeding days are over, hopefully.”
Ryanair, he says, gets 90 per cent of his “waking hours”.
“I have no strategic plan for what I do with my career when I leave Ryanair. And nor should I.”
He loves National Hunt racing, owning Cheltenham Gold Cup winner War of Attrition among others. “I grew up on a farm, my father had a few horses so I like jump racing. And it’s nicely, neatly packaged into Saturdays and Sundays during the winter relatively close to my home.
“It’s also more fun than playing golf,” he says, although his handicap was once a useful four or five. “I was decent when I was in college but that’s all I did in college.”
Any tips for the coming season? “Yes, the bookies always win,” he says flippantly. “JP [McManus] has a very good horse this year, Captain Cee Bee. I think he’ll win the Queen Mother Champion Chase in Cheltenham next year, and a horse called Sizing Europe would be my tip for the Gold Cup.”
O’Leary will shortly pocket about €18.5 million from Ryanair’s decision to pay a dividend for the first time. How will he spend his windfall?
“Stick it with all the other bloody millions,” he says dismissively. “I don’t come to work because I need the money. I come to work because Ryanair is the world’s biggest airline and we can transform Irish and European tourism.
“Will I buy a couple of horses? Yes. Will I have a fourth child? Yes. But will I invest in expensive suits? Obviously no.”
Suits are for funerals and weddings only, he adds. A black one, just back from the dry cleaners, hangs in the corner of his office. Last Friday he wore a pink striped shirt, with sleeves rolled up, and the trademark jeans and runners.
O’Leary says his plan is to grow Ryanair to more than 100 million passengers – this year it will carry 73 million. “Within that, I would really like, in the next 12 months to two years, to revive Irish tourism – and we can do it,” he adds. With his usual modesty, O’Leary says he would be a “fantastic” minister for finance. “I just wouldn’t get elected. What makes you good at politics is compromise, fudge and dithering.”
What would he do if he were minister for finance? “Scrap the Dublin Metro . . . that would be done by 9.30 in the [first] morning. That’s €5 billion saved.”
Next? “I would close all the quangos and save €6 billion a year, starting with Fás. I know of no employer who has ever recruited somebody from a Fás training course. They generally train people to mow lawns for the local church or build a wall around a GAA pitch. Money in Fás is pissed away on consultants to provide absolutely useless training.”
This has been the year of the Big Apology for O’Leary. He has had to say sorry to Mr Justice Peter Kelly, Minister for Transport Noel Dempsey, pilot and trade unionist Evan Cullen and EasyJet founder Sir Stelios Haji-Ioannou. “Generally, every year, I have to apologise to someone,” O’Leary says, trying to make light of it.
Shooting from the hip has always been O’Leary’s style. Will that change? “I don’t think so. The philosophy in Ryanair is that we make decisions and we decide things on the run. I don’t have any difficulty if we make mistakes, apologising for those mistakes.
“In the round, we will get 90 per cent of the decisions right and 10 per cent of the decisions wrong. The key to success is recognising when you’ve f**ked up and stop quickly. Too many people get stuck on their ego and never apologise.”
Here endeth the lesson.
ON THE RECORD
Age: 49 (He's 50 in March)
Lives: Mullingar
Family: Married with three children (number four is due later this year)
Hobbies: National Hunt horse racing
Something we might expect: "I generally don't care what people say about me"
Something that might surprise: "How humble, warm and caring a person I am"
TAKE AIM, FIRE : O'LEARY ON . . .
DAVID BONDERMAN, American financier and Ryanair chairman:
"Genius. Extraordinary commercial talent. I think I'm very good at running an airline but he has insights into 15 different industries at any given time. He's scarily bright. He opens doors for us that would otherwise not be opened."
CHRISTOPH MUELLER, Aer Lingus chief executive:
"It's too early to say but I'm not impressed by all the flip-flops. I would be very concerned about the current strategy of Aer Lingus, which is clearly about higher fares and fewer passengers. No airline in history has succeeded by getting smaller and charging higher fares."
SIR STELIOS HAJI-IOANNOU, founder of EasyJet:
"For a rich kid he did a very good job of setting up EasyJet but the model is broken because it can't compete with Ryanair on price. He'd get on well in Aer Lingus where flip-flops are a speciality."
DECLAN COLLIER, Dublin Airport Authority chief executive:
"He's useless. His record speaks for itself. The DAA has presided over a 33 per cent decline in traffic. They've effectively bankrupted the balance sheet."
CATHAL GUIOMARD, Irish aviation regulator:
"Guiomard is irrelevant. He's supposedly independent but . . . he must comply with a ministerial direction. There's no point in mocking Guiomard any more, he has no independence."
TONY RYAN, Ryanair founder:
"Genius. Pain in the arse. Brilliant but capable of gargantuan mistakes. But he was the guy I learned most from and I was very fortunate at a young age to get to work for him."
ENDA KENNY, Fine Gael leader and taoiseach-in-waiting:
"Untested but I think he deserves a chance. You could only have admiration for the job he has done in turning Fine Gael around. It's fashionable in the media to hammer him but if you look at where Fine Gael was when he took over to where it is today, he's done a fantastic job."
BERTIE AHERN, former taoiseach:
"A complete waste of space. Didn't have a leadership bone in his body. Destroyed a phenomenally successful economy. I gave up on Bertie six or eight years ago with all the dithering."
SEÁN FITZPATRICK, former Anglo Irish Bank chairman:
"Anglo Irish seemed to be a great success over the years but I feel very sorry personally for the vilification he gets now . . . If there was an effective regulatory regime in this country . . . what FitzPatrick was up to shouldn't have happened."
