Thursday, 15 August 2013

Interview: Michael O'Leary, Ryanair CEO

O'Leary maps out growth plans

Ryanair's expanding fleet of Boeing 737-800s will mainly be put to work restoring capacity in European markets whose home carriers are faltering, chief executive Michael O'Leary tells Routes News, though he adds that talks are ongoing with several countries on the peripheries of the continent.

"The big growth for us in the next five years will be taking more of the traffic from airlines that will be imploding, like SAS, Iberia, Alitalia, and the central European airlines," O'Leary says. The low-cost carrier ordered 175 737-800s at the 2013 Paris Air Show, with 70 aircraft slated for expansion and 105 due to replace older units in the fleet.

Negotiations with "most" North African countries are also under way, O'Leary adds, while Israel, Turkey and Jordan remain in the airline's sights. But he insists that the peripheral countries will remain "just that – peripheral". The only non-European destinations in Ryanair's route network are currently in Morocco, which signed an Open Skies agreement with the EU in 2006.

Reiterating Ryanair's longstanding strategy of targeting markets that offer the lowest airport costs, O'Leary explains: "We don't have this Napoleonic expansion plan that we'll go to Spain first, then we'll mop up the Prussian Empire and off into Russia. We'll move around depending on which airports want the growth next, and which airports are prepared to give us the best deals."

However, he emphasises that short-haul capacity reductions by Air Berlin and Lufthansa's mainline unit have made Germany "a very strong growth market for us". He also ridicules the model adopted by Germanwings – Lufthansa's short-haul subsidiary – which has re-branded itself as "reasonably priced but not cheap". Noting the price sensitivity of the short-haul market, O'Leary says: "Competing with them would be like taking sweets off a baby."

Commenting on Ryanair's stalled plans for transatlantic flights, O'Leary says an "oversupply" of widebodies is needed before the airline can acquire "40 or 50 long-haul aircraft cheaply". Without a cyclical downturn or a sharp increase in production rates, that renders low-cost, long-haul flying unviable for at least "the next three to four years".