Michael O'Leary Interview on Newstalk - Part 1

Morning Ian, morning Chris.

Around 6, I think. I must have started following football around '67, '68. And you had that good team: Franny Lee, Colin Bell, Mike Summerbee, Tony Book, all those guys. And clearly, I thought these are a good team, I'll follow them. And of course, if it'd been the previous year, you'd have picked United; the following year, it would have been Leeds. But anyway, I plumped for Man City. I'm very proud of it because for the last 40 years at least, you've been somewhat different to all the Man U fans who, of course, you know, can't help themselves, they just all follow the pack.

No, I'm convinced we'll balls it up somewhere. We'll lose it on the last day of the season.

I don't. I think it's inevitable. It's a part of supporting City is the cruelty of it. There's always the cruelty on the last day. What about the FA Cup? And they won it last year, but they had Stoke at home, and I was convinced they were going to lose to Stoke too. I think if you go back in City to the day when Alan Ball told... was it Quinny? Run into the corner and hold on to the ball when they needed a goal to stay up. It's just inevitable.

No, I was never good enough. Like all kids, I grew up playing lots of football, loved to play football. Played a lot of football in school, in college, but I was... but I would have thought Clongowes, the Jesuits were more rugby boys.

Ah, no, I mean, I think the Jesuit is overdone. My formative influences were clearly my parents in the first instance.

He did many things, a bit like yourself. He was a serial entrepreneur, ranging from a new-wire factory at once, then he was producing commercial rabbit meat, then he was doing by-products. He was always doing something, and quite successful at it. Like, he had a remarkable ability to set up new businesses. He wasn't so good at running them, but terrific at setting them up and getting them up off the ground. All based in the Midlands, all based generally around Mullingar. So I grew up in Mullingar, one of six kids, a big family, and like all big families, it was competitive. If there's any formative influence, it's the fact that you grew up as one of six and you had to move quickly, otherwise you wouldn't get fed.

No, I was always, thankfully, I was always faster than most of the siblings. I know Eddie's a year younger than me, and as you know, like, he's a brilliant horseman, one of the great... one of the top bloodstock people in the country. So I'm very lucky to have him there helping me to buy expensive horses to feed my racing habit.

Yeah, I think so. I mean, probably, but you know, it came at a very early stage. It's only about the fourth or fifth horse I owned, and so I was very, very lucky to fall into one like that, which in many ways is a poison chalice because you know, you start at the top, and after that, everything else is kind of downhill. But it was a great day, fantastic memory. Mouse, a terrific trainer of Cheltenham horses. Conor O'Dwyer rode him, won two Champion Hurdles and two Gold Cups, and it was just one of the fun days and one of the reasons why I love National Hunt racing. I think it's one of the things that the Irish do phenomenally well. And at a time when, you know, there's so much bloody doom and gloom and far too much pessimism, we don't celebrate enough the achievements of the excellence of Irish racing, Irish rugby, and, you know, Ryanair is one of the great success stories in Ireland.

A lot of really good horses, about 40 or 50 on an ongoing basis, and then typically another 10 or 20 coming through, younger horses as point-to-pointers. But as you know, the rate of attrition, their injury rate and the rate of attrition is horrendous in jump horses.

I enjoy it. I mean, you know, buzz...

No, no, never. The last time I had a bet on a racetrack was the day War of Attrition ran in the Supreme Novices at 33 to 1, which must be up the guts of 10 years ago. I waste enough money buying the horses and training them. I don't need to waste more money keeping Paddy Power in the style to which he's become accustomed.

No, I mean, I do breed. You know, on the farm at home, we breed cattle. I breed racehorses for the flat, but sell all those so that I can... I mean, I really love jump racing. Not much interest in the flat. I like the people involved in jump racing. I like the kind of the social, the crack of the nags and the meets. Not much interested in the Curragh and Derby Day. And, you know, my family enjoy it too. It's a great outing for, you know, with the kids. My great-great-grandfather was a prize-winning breeder of Aberdeen Angus bulls. And at that time, for those of you who don't know, they're small, they're black, they're back in fashion.

My great-great-great-great-grandfather was John Jackson, so there's a lot of bad in there too.

The only way he could breed cattle was to make money distilling whiskey. You know, where I make money in the airline business and then lose it farming.

Hey, it's serious. We've got about 200 cows. You know, we breed them, pedigree Angus. They're easy to manage, unlike the big Charolais and the other cattle which need a lot of management. The Angus kind of look after themselves, eat the grass, mow the lawns, and that's about it. It's relatively simple.

It didn't, actually. I was working for Tony Ryan, as I said, as his bagman at the time. And at the time, he was generating quite a... making huge money in GPA, getting huge dividends, and he was stupid enough then to put it back into the airline business. So they set up Ryanair. It was losing money hand over fist over the first two or three years, and as soon as he'd get a dividend from GPA, it'd be absorbed in Ryanair. So we were scouting around for someone to run it. Nobody wanted to run it. I was very strong on shutting it down because I thought it could never make money. Tony, to his eternal credit, said no, we'll give it one last go. So he sent me off out to the States to look at this Southwest.

Adviser is a bit overblown. I mean, I was essentially, you know, his gopher. I was minding the money, an accountant, and this was the big money pit at the time.

Business... it was carrying about 200,000 passengers. It lost, I think, about 7 million quid one year doing about 200,000 passengers, flying people between here and London, and Watford and Luton, stuff like that. But, you know, they expanded too quickly, did a lot of Romania airplanes. It really was then they had a business class and, God help us, a frequent flyer club. They were trying to do a mini-me of Aer Lingus, and Aer Lingus didn't make any money at the time either, so a mini-me version wasn't going to succeed.

I went to the States, met with Herb Kelleher, looked at Southwest Airlines. It was a revelatory moment in terms of, you know, the sort of Damascene conversion. You know, he was selling $10 fares across the States, the place was full, planes arrived in, turned around quickly, back out again, like Formula 1 pit stops. Whereas in Europe, you know, we had planes arriving in, pilots having a... everybody else sitting on their bums because it always takes an hour to turn the plane around, do all this kind of nonsense. And so what I learned there was, you know, strip it down. What people want is a cheap, affordable, safe air travel from A to B, and if you give it to them, they'll flock to it. And the formula has never failed since.

It's not a no-frills, low fares. I mean, you know, I see a lot of newspapers who like the Irish Times who like to be somewhat cynical refer to us always as no-frills. I don't know what the frill is that you're missing on Ryanair. With leather seats, most punctual, most on-time flights, youngest fleet, great-looking hostesses. We have all the frills that the passengers really want, which is a combination of lowest fares, most on-time flights.

'91, '92, I was in charge... well, no, I was actually working with a guy called P.J. McLoughlin, who was brought in as the chief exec, who's a very good kind of engineering, former pilot, very good at the nuts and bolts, which I didn't have a clue about. But I did all the kind of the cutting and slashing was mine. And I was young at that stage, you know, didn't give a toss, you know, whose feelings you hurt. So went and cut and slashed.

Utterly disinterested. It's a business. I have no interest in airplanes. They bore me to tears. I have no interest in sitting in the cockpit. You know, the pilots do a very good job on days when the weather is difficult. They do a remarkably easy job on sunny days. But no, it's just this is utterly commoditized. It's transport A to B. And what people want is not to be ripped off at 200 and 300 quid airfares. They want 40 and 50 quid airfares, and it works.

Honestly, you never think this is suddenly going to start working. I mean, when I first took it up and went in, it was losing about 7 million. After we started to copy the Southwest model, I think it broke even one year, and I thought, you know, it might make a million in a very good year. And ever since that day, we've just been growing it, lowering the costs, increasing the revenues, and hopefully increasing the profitability. It's never... you never sit back and say this is it, it works. We're always trying to find new ways of lowering the fares, carrying more people, and beating up on more competitors.

Customer... we have the best customer service in the industry, and we're the only airline that really delivers what customers absolutely want: a combination of lowest fares, on-time flights, on a young and very young and a very safe fleet of aircraft. Customers really don't want anything else, as demonstrated by our growth.

Got to be careful here. The customer in Ryanair is always right if what they want is the lowest fare and on-time flight on a brand new aircraft. If the customer wants a refund, however, of a non-refundable ticket, then they're wrong. If the customer wants to complain, and most of the biggest number of complaints we get at the moment is the on-time music.

Oh, that trumpet. I kind of say, well, why don't you fly with Aer Lingus? You'll never hear an on-time music on Aer Lingus because they're always late. I find the on-time music endearing. I find it great. I'd far prefer to listen to the on-time music, at least it wakes everybody up so they get off the plane quickly, rather than wasting time or whining on about late flights.

No, we're not. I mean, we're on, you know, quite a decent margin. Well, it's fluctuated largely because of oil between 20 and 10% over the last number of years. But once you get to any stable period with oil, we should be making about 20%. I mean, we've invested over 6 billion dollars in aircraft. I mean, if we're not getting a decent reward for that kind of risk, we shouldn't be in the business.

Yeah, I think we do. I mean, but the problem is everybody looks at Ryanair and they're all looking for... there's one secret. There's, you know, oh, they bought planes cheaply, or oh, they just treat people badly, or... Every single line of our operation is smarter, lower cost, or more efficient than almost every other line. You take the staff. I mean, our pay in Ryanair is the third highest of any European airline. Average pay in Ryanair is the third highest of any of European airlines. So we're a high-pay airline, despite we have this impression of, you know, being some Siberian salt miners. Whereas in reality, the pay is good. Now, but in return for that, the productivity is very high. The legal limit for pilots can fly 900 hours a year, which is not a lot. It works out at an average of about 18 flight hours a week. But we have our guys up doing about 850 hours consistently, year in, year out. So we're getting the maximum out we can under law without kind of overworking them too much. But you'll find a lot of the flag carriers, whether it's Aer Lingus or Air France or BA, their short-haul pilots are doing about 200, 300 hours a year because the whole operation is set up so badly or so inefficiently. We don't. We set everything up very efficiently, and we tell passengers it's that time, it's that price, show up. I mean, the idea that the great one for us in recent years, and the simple one, has been charging for checked-in bags. And everybody thinks it's a money-making scam. It isn't. We don't want checked-in bags at all. The reason for the charges is if we can get rid of all of the checked-in bags, we now wouldn't need a check-in desk, a check-in staff member, we wouldn't need a baggage handler, we wouldn't need a lost bag department, we wouldn't actually need an airport terminal at all.

That's actually true. But the difference now is that the family of four, the family of four children, you'll see them now traveling with six carry-on bags and maybe one or two cases, whereas historically, five, six years ago, they'd have all traveled with six checked-in bags and six carry-on. So it's about reducing that. And checked-in baggage is the greatest nonsense. I've never understood it. And we inherited the airline business because in the pre... the inter-war years, the only people who could fly were the Vanderbilts and the Yates and the rich. Point, we take the ferry. And actually, what happened was because they were transferring off the presidential cabin into Titanic, their men with white gloves would bring the luggage on, bring the luggage off, and that's the way the airlines inherited this crap. Whereas in every other form of transport, you bring your own bag on a train, stick it up yourself, you put your own bag in your own car, bring your own bag onto the plane. Why the hell are we taking...

I think I will be eternally grateful to my parents. I mean, eternally grateful to my parents for the enormous sacrifices they made to send me and the rest of my brothers and sisters, you know, to places like Clongowes. The girls went to the Abbey. But, you know, he did not have... he wasn't super wealthy. He was a kind of a, you know, in the '60s and '70s, believed in education, obviously. He believed in education, my mother very strongly in education, and I would be eternally grateful for it. But the funny thing is, Clongowes has this aura of being... well, you went to Trinity as well, though.

Oh, no, went to Trinity. Well, I mean, there was plenty of them there when I was there. Some of them are still there.