The Big Interview: Ryanair chief Michael O'Leary

Ryanair chief executive Michael O'Leary breezed into London last week in characteristically sparky form. Ostensibly, it was to launch the budget airline's London summer 2018 schedule. But with the cheerfully robust O'Leary you never get just what's on the tin. Britain's cackhanded Brexit negotiations that might lead to no flights between the UK and Europe, the cosy 'stitch-up' of Air Berlin's rescue by German market leader Lufthansa, drunken louts on planes and why chief executives are more worth their salaries than Premiership footballers were all in O'Leary's crosshairs.

Michael OLeary says aviation is a stick the EU will use to beat Britain with. Photograph: Christof Stache/Getty
Michael OLeary says aviation is a stick the EU will use to beat Britain with. Photograph: Christof Stache/Getty

Not to mention Theresa May’s jaunt to Japan “drinking tea and sake” when there is a “crisis coming down the road”. The Prime Minister met her counterpart Shinzo Abe for meetings focused on North Korea and a possible trade deal. But, warming to his subject, O’Leary said: “I fail to see what she’s doing in Japan for three days at the moment. It’s absurd. She should be in Brussels, or Frankfurt or Paris, which is where these [Brexit] negotiations need to take place. Brexit is going to be a disaster for the UK economy. She needs to be over there negotiating or at least removing these roadblocks.”

The Ryanair boss, talking to media in a central London hotel, took a little time to also unveil the airline’s summer 2018 schedule, with 168 routes in total. It includes five new London Stansted summer routes to Aalborg, Dusseldorf (Weeze), Frankfurt, Oradea and Pardubice, and a new London Luton route to Bydgoszcz, which will help deliver 24.8 million customers a year through Ryanair’s three London airports of Stansted, Gatwick and Luton this year. “We are running out of exclusive, sexy destinations so we are now going to destinations even I can’t pronounce,” O’Leary said.

He also reminded everyone that July was a record month for Ryanair as it became the first European airline to carry more than 12 million customers in a single month.

But battle soon commenced again. “Enjoy our summer 2018 schedules. It might be the last time you can fly in Europe for a year,” O’Leary said. “People trying to book their holidays for summer 2019 here in the UK this time next year… the options may be Scotland or getting a ferry to Ireland.”

His contention is that the EU, dominated by Germany and France, holds most of the cards in the Brexit negotiations, and is looking for a stick to beat Britain with, and aviation is an obvious one if there is a “hard” EU exit. He said: “All the pressure is on the British side. If there is not an agreement by March 2019 Britain gets pushed out of the EU. The legal position is that flights then stop.

“The best outcome for us is Britain to stay in the EU and an open skies agreement. But the deal that Britain is going to be offered is untenable if [the UK government] is going to stick to its red lines.” O’Leary said ideally the air travel industry needed to have an agreement in place at least six months before the March 2019 deadline for Brexit. “But I don’t share her [Theresa May’s] confidence. The UK government says Spanish hoteliers and regional airports [in the EU] will put pressure on their governments. But this is big boy politics. The UK could run out of time. The Europeans are looking for a stick to beat Britain with. And before March 2019 aviation is the one.”

He said it didn’t help that the UK market was not that important to the likes of Air France-KLM and Lufthansa, being less than 4 per cent of their overall market. While acknowledging May may be able to “fudge” an interim flight deal between the UK and Europe, O’Leary said the prospect of possible major flight disruption was clear and Ryanair could not rule out in that case moving some of its 60-strong UK fleet to European hubs.

He said his group had joined Airlines UK, the body that represents UK registered carriers, even though Ryanair is an Irish company, to press the case for a softer Brexit more ably.

The European fireworks move naturally on to Ryanair’s decision not to bid for any of the assets of the insolvent German airline Air Berlin.

O’Leary told media audiences in both Berlin and London last week that the process was a “stitch-up” by the German government to deliver Air Berlin to German market leader, Lufthansa, in clear breach of anti-trust rules. The German government has already said that a bridging loan of €150 million (£139m) it has granted to Air Berlin does not breach anti-trust rules, although a takeover by Lufthansa would give the airline more than 90 per cent of the German domestic market.

“This is a clear breach of all known German and EU competition rules,” O’Leary said. “Lufthansa will be not just a German champion but a German monster. The Germans are very fond of telling everybody they should obey the rules unless it suits them. German customers will suffer higher fares for the next five to ten years to pay for this thing.”

By contrast, he added that Ryanair remained interested in picking up assets from the sale of loss-making Italian flag carrier Air Italia, possibly through “competition remedies” as part of a likely break-up of the airline.

On another tack, the Ryanair chief, who earned nearly £3m last year, thinks the UK government’s fuss about chief executive pay is overdone – particularly compared with Premiership footballers. The Prime Minister’s watered down plans include a blacklist of companies where at least 20 per cent of shareholders vote at the AGM against the remuneration report. But O’Leary said: “I think company bosses are remarkably badly paid. If you can have Wayne Rooney getting £300,000 a week and Alexis Sanchez on £400,000, I’m seriously underpaid. I don’t score as many goals but I employ a lot more people and make a much bigger contribution to the UK economy.”

Earlier this year Ryanair hit the headlines by campaigning for a strict limit on how many alcoholic drinks passengers could have in airport bars before they boarded flights, following a flurry of incidents involving unruly behaviour on planes. O’Leary returned to the subject, saying that he was “not a killjoy”, but as airports were responsible for safety they should “also be responsible for sobriety”.

He added: “We are left dealing with problems in the air.” Ryanair is campaigning to impose a limit of two alcoholic drinks for passengers before they board and a total ban on drinking alcohol at airports before 10am. O’Leary said that some passengers “sit around in bars getting progressively more and more drunk. We have to deal with the discomfort to our other passengers. People should not be drinking ten or 12 drinks. We don’t need stag or hen parties.”

Despite the aggravations, Ryanair, in which O’Leary owns a 4 per cent stake, posted a 55 per cent surge in profits to €397m (£365m) in the three months to end-June on revenues up 13 per cent to €1.9 billion. However, although it said average fares rose 1 per cent in the period, it added that it expected fares to fall 5 per cent in its first trading half and by 8 per cent in the second half amid tough competition in the sector and as Ryanair passes on lower fuel costs. O’Leary pledged to ratchet up the pressure on less well-capitalised rivals, claiming “our fares are falling faster and steeper than any other airline. We use that price advantage to spread the message of low fares across every country in Europe.”

And it would not be the maverick Irishman if there was not a little pop at rival BA. He said Ryanair was beating BA on most metrics, from punctuality (Ryanair’s 90 per cent to BA’s 74 per cent) to legroom (31 inches compared with BA’s 29 inches).

O’Leary said the company was either No 1 or No 2 in every country it operated in, and that price pressures would probably lead to a shakeout in the European air industry. He forecast that in five years there would only be four or five airlines flying in Europe, namechecking Ryanair, British Airways, Lufthansa, Air France-KLM and possibly EasyJet.