Ryanair boss Michael O’Leary likes to try to take control of a situation, even when others think the effort would be worthless. He displayed that trait this week when he announced an ambitious plan to get his airline back into Europe’s skies from 1 July onwards. His optimism was in stark contrast to the pessimism displayed by his compatriot Willie Walsh, boss of IAG (owner of British Airways, Aer Lingus and Iberia). A day earlier Walsh had said the group would review plans to return to flying in the same month, after Boris Johnson announced plans to quarantine arrivals to the UK.
O’Leary has form, and success, in bucking the conventional thinking of competitors and commentators alike, showing a knack in the past for correctly reading public sentiment when others didn’t. “People have been locked up since the middle of March,” he noted. “People are really gagging to get out and I think get abroad for the sunshine.”
Previously he has identified a desire for travel among the masses that many would have considered unlikely, such as when the doomsayers predicted that airline travel would never be the same again after 9/11.
When rival airlines held out the begging bowl to governments to cover their losses when grounded, O’Leary responded to the 2001 attacks with a seat sale, having waited a couple of weeks while people dealt with the shock. He gambled correctly that if prices were low enough customers would take advantage to get a cheap holiday and that he would make money by flying Ryanair aircraft.
He followed the same pattern again after various terrorist outrages over the next decade. He calculated that passengers would be confident that attacks would be extremely rare and that security measures at airports would be sufficient to protect them. His counter-intuitive nature, as well as a ruthless approach to keeping costs low, built an airline that carried more than 140 million passengers a year at its peak, generating profits of more than €1.4bn (£1.2bn).
Personal pride, as well as near 4% ownership of the company and a bonus plan that could pay him €99m if he gets the share price high enough by 2024, are incentives to get his aircraft back where he wants them. Ryanair went into this crisis with enormous cash reserves – of about €4bn – but they are being sucked away with 450 aircraft on the ground.
From July O’Leary plans to lead the recovery of the ailing European aviation industry by restoring about 40% of Ryanair’s flights, which would be 1,000 flights a day, flying from as many as possible of its 80 bases around Europe. He announced a range of measures that he believes will make Ryanair flights safe.
O’Leary has to hope that enough customers will overcome their fears of contracting the virus and regard the protections offered on the flights as sufficient. He expects them to plump for the attraction of a holiday.
He knows that many people will not be inclined to following official advice, particularly as their patience wears thin. He may be confident that they won’t share the pessimism of the British health secretary, Matt Hancock, about the likelihood of taking a foreign holiday. When asked about Boris Johnson’s quarantine plans, O’Leary declared them “nonsense”.
Walsh, who has delayed his retirement until September, was downbeat when he appeared in front of a House of Commons committee on Monday. He spoke about IAG’s ability to survive if it couldn’t get flying again in July as it had wanted and planned, notwithstanding the very large cash balances that put IAG in a stronger position than most airlines.
Johnson’s Sunday declaration of a two-week quarantine period for people returning to Britain (other than from Ireland and France) seemed to particularly spook Walsh.
“We had been planning to resume on a pretty significant basis our flying in July,” he said. “I think we’d have to review that based on what the prime minister said … whatever way we look at it, it is our most optimistic scenario that it will be about 2023 before we get back to 2019 levels. There are some people predicting that it won’t be until 2026.”
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Walsh won’t be at the helm of IAG helm for that, but O’Leary is committed to Ryanair for at least three more years. The Irish rivals are probably the most important figures in European aviation. They are close personally, agreeing on many things, and both display a ruthlessness and relentlessness in driving down costs. Their divergence in recent days on how to get planes into the air is instructive as to the possibilities for the entire industry.
O’Leary’s efforts to create demand may be exactly what the European aviation industry needs if it is to survive in something resembling its current form. He may be hamstrung though by constraints beyond his control, whatever his reading of public desires. To achieve his aims, O’Leary needs the lifting of government restrictions on what are considered non-essential flights and effective public health measures to be put in place at airports. His publicity drive across British television on Tuesday was just the starting point of what is likely to be a noisy campaign.
• Matt Cooper is the author of Michael O’Leary: Turbulent Times for the Man Who Made Ryanair
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