Ryanair CEO talks 737s, acquisitions and taxes
Michael O’Leary, the devil-may-care head of Ireland-based European budget airline Ryanair, made his first Air Show appearance in Paris this past week, and lived up to his reputation for colorful language and unmediated disrespect for legacy flag carriers and government bureaucrats.
By Seattle Times business staff
Michael O’Leary, the devil-may-care head of Ireland-based European budget airline Ryanair, made his first Air Show appearance in Paris this past week and lived up to his reputation for colorful language and unmediated disrespect for legacy flag carriers and government bureaucrats.
O’Leary came to seal a deal announced earlier with Boeing for 175 current model 737NGs. He attracted a full house of journalists well aware of the sound-bite possibilities, and he did not disappoint.
Arguably the most hard-nosed operator in the airline world, he offered nuggets of wisdom on the state of the airline world, mixed with his routine invective and only a single passing use of the f-word.
O’Leary was, of course, full of praise for the “phenomenally reliable” jet he was in Paris to sign for, the Boeing 737-800. By this summer, he’ll have a fleet of some 300.
“Boeing has always made great aircraft,” he said. “Ryanair has the highest technical reliability and is the most on-time airline in Europe. None of that would be possible without a great aircraft like the 737-800.”
He has not yet bought the next version, the 737 MAX, but said he’s weighing that plane against the rival A320neo and hopes to seal an order of at least 200 airplanes by year’s end.
While O’Leary described the neo as “a serious airplane,” he provided a detailed argument for why the MAX is likely to win his favor.
And yet when Ray Conner, head of Boeing Commercial Airplanes, interjected to assert Boeing’s message in Paris that the MAX will have 13 percent better fuel burn than the neo, O’Leary was wily enough not to make it too easy for Boeing.
“I don’t necessarily agree with that,” O’Leary responded at once. “It’s inevitable each manufacturer says they’ll do slightly better. I think where they’ll finish up is that on fuel burn the MAX and the neo will be pretty similar.
“But what’s compelling for an operator is that the MAX has more seats,” he added, to Conner’s evident relief. “It will still come down to the fact that the MAX will have nine more seats than the neo.”
To him, he said, that’s worth “a million bucks a year.”
So it certainly looks good for a very big MAX order from Ryanair.
However, O’Leary said that pricing will determine how many he will order. With a nod to Conner beside him: “It depends what he tries to stiff me for.”
O’Leary said the Boeing jets he bought Wednesday will ensure very strong growth over the next five years.
“Europe, which tends to be a sea of Airbus aircraft, will continue to be led by, and dominated by, a Boeing operator,” he declared.
And beyond Boeing’s “bigger and better” aircraft, he cited tongue in cheek one more reason for Ryanair’s success: “We have supremely talented but very humble senior management.”
Other notable quotes:
• On Chinese airplane maker COMAC, which is designing the C919 and has consulted with O’Leary, he said he is still in dialogue with COMAC but expected that the first C919 would largely be sold only in China and to some regional Asian carriers.
However, by the middle of the next decade he expects COMAC to be producing aircraft that are something close to current Western standards.
“By the early to mid-2020s, they’ll be selling what are effectively glorified, re-assembled A320s.”
By then, he predicted, Ryanair will have doubled in size, with a fleet of about 600 737NGs and MAXs.
• On the three-month grounding of the 787 due to batteries overheating earlier this year:
“I’m mystified by the amount of crap Boeing has had to put up with for some relatively minor service problems with 787s, which are pretty standard on the introduction of any newly designed aircraft.”
• On some other European airliners:
“Air Berlin continues to stride forward by getting smaller.”
“Only in Norway would Norwegian be considered a low-cost airline. Which is why every time they come to compete with us, be it in Dublin or anywhere else, they’ve usually struggled.”
And O’Leary thinks Norwegian’s chief executive, Bjorn Kjos — who has bought 787s to expand into long-haul operations — has been deluded by the lure of aviation technology.
“Like a lot of pilots, he gets sexually aroused about aircraft.”
• Would O’Leary like to expand operations into Russia, a Russian journalist asked.
A resounding no. He blamed “the regulatory crap that exists in Russia.”
“There are considerable regulatory hurdles over there, which frankly are a pain in the arse, and life is too short when we have so many more growth opportunities.”
• Having bid unsuccessfully for Irish flag carrier Aer Lingus, would he consider any other airline acquisitions?
“We have considered a takeover of Lufthansa, but frankly, its market cap is a little small compared to us and the strategy is a bit confused, so we ruled it out.
“We’ve never considered taking over Air France, though we could probably buy it out of the loose change we have.”
• On the European Union plan to introduce a carbo- emissions tax on airlines, a plan delayed last year by stiff opposition from China and the U.S.:
He began by deriding the notion of global warming, which he blamed on “environmental loonies” and “a bunch of incompetent European politicians taxing Europe’s consumers so that they can do something about climate change.”
It would be better to address real issues such as European unemployment by promoting tourism, he said.
“Instead of trying to solve nonexistent issues like climate change, why don’t you actually get young people in Europe back to work?”
— Dominic Gates: email@example.com