Michael O’Leary……Ryanair’s rebel with a cause and a mate of Qantas new CEO Alan Joyce.

Michael O’Leary has a reputation as a tough cost-cutter and a loudmouth. Could that count against him in his second bid to buy Irish rival Aer Lingus and could this be a sample of what Qantas’ will look like in the future, with O’Leary and Qantas new CEO Alan Joyce coming from arguably the “same stable”.

In the London Times

Andrew Davidson interviewing the the boss of Ryanair says he has flown me all the way to see him and I’ve lost my pen. “Not a problem,” says Michael O’Leary, in his light Irish brogue. “I collect biros from hotels, take your pick.”

He throws me a clutch of 10 or more. Hilton, Radisson . . . “I banned us from buying biros a few years back,” he grins.  Now his staff are encouraged to find their own instead.  And that, of course, is typical O’Leary. Boss of Ryanair for 14 years, still only 47, he has built his budget airline into one of the biggest in Europe by doing everything differently: cutting costs, slashing prices and abusing rivals in the process.

And soon, he says, Ryanair will be the biggest airline in the world, and if you don’t like it, tough.  It is already the biggest international carrier in terms of “bums on seats”, with 49m passengers carried last year, and will eventually outstrip rivals who currently carry 100m, including domestic journeys.  Just give him a couple of years and a good recession . . .

Anyway, first the pleasantries.  Trim and affable, O’Leary is waiting in reception at Ryanair’s Dublin airport HQ to say hello, looking like the scruffiest man in the building — cheap jeans, check shirt, black loafers.  His greying hair is restyled in a short mullet crop.

“How was your flight?” he asks.  Bumpy and late.  He knows already, reading from a scrap of paper in his hand.  “It says the inbound flight at Gatwick lost 25 minutes unloading a wheelchair.”  He pulls a face.

Then down to business. He wants to talk about his new bid to buy Irish rival Aer Lingus, based within rock-throwing distance of his office across the airport car parks.  Ryanair bid £1 billion to buy it two years ago and was rebuffed.  Last week O’Leary was back with a £635m offer, and is confident that this time he’ll get it.  He gives me the sales pitch in bullet points.

“What is going on now is most of the second-tier European flag carriers are all looking to merge or consolidate with one of the big three: BA, Air France and Lufthansa.

Aer Lingus is bypassed in that process as not of strategic importance to any of the big three, just an orphan.  We believe that the only future it has is as part of one strong airline group with Ryanair.”

But Aer Lingus, Ireland’s flag carrier, is protected by a 25% government stake, and European regulators hate waving through monopolistic consolidation.  O’Leary — who likes to call regulators “numbnuts” — shakes his head.

“With unprecedented crisis in the world, bigger national champions are the way forward, particularly if you’ve got a small, second-tier airline that has confirmed it’s going to lose money in 2008 and 2009.”

As for regulators: “This is the only airline merger in history that guarantees fare cuts and fuel-surcharge elimination. We are now the largest low-fares airline in Europe, dominant in most of the airports we serve, and we’re still lowering air fares because we’re growing rapidly.”

And that, he promises, will continue, however long the recession.

Ryanair, hammered by high fuel prices, may make little money this year on revenues topping 3 billion Euros, but it will bounce back into big profit next year, and keep expanding.

Isn’t that high risk, now the quality routes are mostly filled?  He bats that aside. “I’ve worked through four recessions already and what happens is that we grow faster because everyone becomes more price sensitive.”  “Passengers trade downwards from high-fare, fuel-surcharging airlines like BA to low-fare, on-time airlines like Ryanair.”

His brown eyes twinkle.  O’Leary is a master of the bullying soundbite — he’s full of them, and admits it’s a style he’s developed to get cheap publicity.  Trained as an accountant, educated at Jesuit boarding school, he wouldn’t even have his picture taken when he started at Ryanair.  Now it’s all hectoring ads, yob language and gurning photoshoots where he bestrides model jets and waggles them suggestively.  That kind of character flip has surprised many, but it works. The profanities do grab attention.

“Look,” says O’Leary, “if people are gobshites and wankers, you should call them gobshites and wankers.”

So Gordon Brown is “a liar” (for saying airport departure taxes get spent on environmental initiatives), Britain has a “*****–up” regulatory regime, Easyjet should be called Frequentlydelayedjet, and Ryanair’s Christmas charity stunt is a calendar of bikini-clad cabin crew.

Don’t even get him started on Irish politicians, global warming, the ridiculous cost of new airport terminals, or the prospects for Europe’s smaller airlines.

“I’d say the only airlines you could book with confidence this winter are Ryanair, Easyjet, BA, Air France and Lufthansa.” The others? “They’ll go bankrupt or marry.”

Some in the sector think O’Leary is now caught in a character of his own making, raging at everyone and creating an ethos where price is all and customer care is a low priority.  If Ryanair ever hit a setback — air crash, operational collapse — passengers would desert it in droves, they say.  Others maintain that O’Leary, mentored by Ryanair founder Tony Ryan, who shared the same rebellious streak, is simply the smartest boss in his industry.

“Michael’s genuinely fearless,” says Sir Michael Bishop, founder of British Midland. “I yield to noone in my admiration of what he’s achieved.”  “And if he’s a bit of a monster, well” — Bishop chuckles — “some of the best business people are monsters, aren’t they?”

Those who’ve worked with O’Leary say he may be aggressive, but he’s also funny, generous and highly effective. And what he’s achieved is remarkable.

At Ryanair, he has the lowest cost base thanks to the fastest airport turnrounds — like Formula One pit stops, he says.  He is also a non-stop inventor of ancillary revenue streams and new marketing gimmicks.  Liberalisation means the days of deferring to politicians protecting national flag-carriers are long gone, as the Irish government is finding out.

Yet will they want to sell to someone who so frequently bad-mouths them? Airline veterans think they may have to. O’Leary shrugs and says Ryanair can prosper without Aer Lingus.

And that’s trademark O’Leary. Eldest son of an affluent entrepreneur farmer, with five siblings, he’s enjoyed writing his own rule-book from the start.  First in his family to go to university, he chucked in a good job at accountant KPMG to trade sweet shops.  “Buy one that opens 9-5, open it 7-midnight, worth a lot more,” he explains.  He used the profits to develop property.

Ryan, who started Guinness Peat Aviation — the biggest aircraft-leasing operation in the world — had already spotted his potential.  O’Leary worked on Ryan’s tax for KPMG.  Ryan lured him away from the sweet shops with a promise of 5% of anything he made for his new boss.  Then he sent him into fledgling airline Ryanair in return for a 25% stake.

The loss-making venture was a direct competitor to Aer Lingus where Ryan had started.  O’Leary, inspired by America’s first no-frills airline Southwest, rejigged the concept.  Floated in 1997, Ryanair has gone on to make its chief executive a £325m fortune.  He retains a 5% stake, and is the fourth-biggest shareholder behind three American institutions. Ryanair’s chairman is private-equity veteran David Bonderman, another O’Leary mentor, who helped turn round Continental in America.

According to one former Ryanair executive, these links are key. “Michael manages relations with shareholders and the Ryan family very well — and boy, has he delivered for them.”

They will be watching the Aer Lingus bid with mixed feelings, for it could bring O’Leary one step nearer to leaving.

“I will be gone in the next two years,” he confirms. “Just three projects left: buy and reorganise Aer Lingus and break up the BAA and Dublin Airport Authority monopolies.”

Small ambitions, then. He laughs, then adds thoughtfully: “I’d like my kids to grow up without having some kind of celebrity father.”  He has two sons, both under four.  Reading about how dad describes his business rivals might not be the best thing for their young ears.  Before that exit, says O’Leary, he’s going to change air travel some more.  He wants everyone to check in online, and carry even heavy luggage through security to the aircraft steps, so it can be put rapidly in the hold.  Then you can turn up 30 minutes before leaving. “**** the queues,” he says. And sod the shopping.

And he’s jolly enough to offer me a lift in the crew bus back to the terminal.  He’s driving, bantering with the boys in the back, and it’s hard not to admire his brio.

As one of his former team says, however bad the recession gets, don’t bet against O’Leary being the last man standing.

The life of Michael O’Leary

VITAL STATISTIC

Born:March 20, 1961

Marital status:married, two sons

Education:Clongowes Wood College Jesuit boarding school, Kildare
University:Trinity, Dublin

First job:trainee accountant, KPMG

Pay:€595,000 plus €560,000 bonus

Home:Mullingar, west of Dublin

Car:black Mercedes taxi. ‘I bought it so I could drive in the Dublin bus lanes.

Cost me €6,000 just for the taxi licence – anyone can do it.’

Favourite music:U2

Favourite book:Elizabeth Longford’s biography of Wellington

Favourite film:Patton, Lust for Glory

Favourite gadget:old-style Philips Dictaphone

Last holiday:Algarve

DOWNTIME

Relaxes by watching his horses at the races. “I have between 20 and 30 National Hunt horses, trained in Ireland. Make money? No, if you like jumping, you lose all the time, it probably costs me €1m a year. But winning the Cheltenham Gold Cup a couple of years back makes up for it.” He says he has few other expensive habits. O’Leary supports Manchester City in football. “I’m a bit rebellious, and when I was a kid everyone else was supporting Man U and the like so I chose Man City.”

WORKING DAY

Wakes at home at his 900-acre farm in Mullingar, west of Dublin, at 5.30am.

Michael O’Leary is picked up by his taxi, and driven to his office at Dublin airport by 7.30am. “Every day is different.”  “I’ve got nine senior managers reporting to me on a weekly basis.”  “I concentrate in particular on safety, punctuality and costs.”

He also keeps a close eye on sales and marketing, and will hold frequent press conferences to raise publicity. “I think up some of our ads, too – you should see the ones we haven’t run.”  “It’s a very young team here, average age of about 27.”

He dismisses industry gossip that he is notoriously tough on staff work schedules. “Yeah, everyone works hard but we’ve created 6,000 jobs in the last few years and we have higher average pay than BA, Air France or Lufthansa.” He is driven home at 7pm.

A Report by The Mole

Related News Stories: