Is Michael O’Leary the best CEO ever?

 

 

Many times in this blog we’ve had posts about the controversial Irish carrier Ryanair and its even more so CEO Michael O’Leary.  From misleading advertising to raunchy charity calendars, Ryanair gives us interesting conversation topics recurrently. The airline, famous for its low prices and extra-charges, might owe all its prestige (or loathe by passengers) to one man in particular, its Chief Executive Officer, Michael O’Leary.

 

 

O’Leary’s work for Ryanair is based on four key principles, which according to Emma Lunn[1] were borrowed from American carrier Southwest Airlines (largest low-cost airline in the U.S.). Here we have such principles (as seen on Yahoo! Finance):

 

Principle 1: Use one type of plane

Aeroplanes are expensive, so to save money Ryanair only uses one sort of plane. That keeps down maintenance costs and also means that – because it’s making huge orders – it can negotiate great deals from manufacturers. It also keeps a new fleet, to keep maintenance and fuel bills as low as possible.

 

 

Principle 2: Turn aircraft around fast

Once you’ve spent the money on the planes, you need to get the most out of them.

 

So Ryanair turns its planes round fast, getting them back in the air and flying full of passengers as soon as possible.

 

That means more trips per plane with the added benefit of getting more trips out of of your staff.

 

Take its attitude towards hold luggage, for example. Hold luggage takes time to load and unload – it also adds weight to the plane meaning you pay more in fuel per trip.

 

So less hold luggage means less time in the airport and less time refuelling fuel per flight (not to mention the price of fuel). So they charge for it not just to earn cash, but to save time.

 

Principle 3: Keep overheads down

Flying to airports near cities results in higher airport fees, so Ryanair doesn’t if it can help it.

 

Its website is functional, not flashy – as is its advertising. In fact, why bother paying for advertising at all when a controversial chief executive can get you publicity for free? Think about it for a second – when did you last see a Ryanair advert on television? And when did you last see a BA one?

 

Customers book online, without using travel agents. The company has no airport check in desks either, saving more money.

 

But what if you could go further than just saving money on airport fees? Ryanair brings so many passengers to an airport, many regional ones are prepared to pay for the privilege of having them fly there.

 

Some reports put the amount of money Ryanair makes from regional airports across Europe in the hundreds of millions – meaning the carrier makes as much from them as the “added extra” charges that drive passengers up the wall (although apparently not into the arms of rival airlines).

 

Ryanair emphasises that any money it receives from airports is above board and not state aid or in breach of competition laws.

 

Staff costs are also kept as low as is reasonable. Things like uniforms, training, drinking water while on the plane and the like are frequently the responsibility of the employee to pay for, or deducted from salaries, rather than provided by the company.

 

Ryanair also works its staff hard – like its planes. Once someone is fully trained up, it’s a waste to not have them working and earning money for the company. That said, the company can be a good payer. Ryanair has often described its pilots as the best-paid in Europe.

 

Principle 4: Ditch air miles

Every mile you fly costs both in fuel and in time. So for every mile less you fly you not only use less fuel, but you can get more cash-generating trips in for your costly aircraft and crew.

 

Those out-of-city airports not only save cash in fees, they mean more flights per plane, per day – and so more money for the company.

 

O’Leary has carried out this recipe meticulously and that might make him one of the most brilliant CEO’s out there, but if you are not fond of his management and business strategies, you ought to reckon his wittiness precedes him. By courtesy of The Telegraph we have 7 of Michael O’Leary’s most memorable quotes:

 

One thing we have looked at is maybe putting a coin slot on the toilet door so that people might actually have to spend a pound to spend a penny in the future. If someone wanted to pay £5 to go to the toilet I would carry them myself. I would wipe their bums for a fiver.

 

“I would wipe their bums for a fiver”: Michael O’Leary.

I’m here with Howard Miller and Michael Cawley, our two deputy chief executives. But they’re presently making love in the gentleman’s toilets, such is their excitement at today’s results.

 

You’re not getting a refund so fuck off! We don’t want to hear your sob stories. What part of ‘no refund’ don’t you understand?

 

The best thing you can do with environmentalists is shoot them. These headbangers want to make air travel the preserve of the rich. They are luddites marching us back to the 18th century. If preserving the environment means stopping poor people flying so the rich can fly, then screw it.

 

MBA students come out with: “My staff is my most important asset.” Bullshit!. Staff is usually your biggest cost. We all employ some lazy bastards who needs a kick up the backside, but no one can bring themselves to admit it.

 

Do we carry rich people on our flights? Yes, I flew on one this morning and I’m very rich.

 

I think the most influential person in Europe in the last 20 to 30 years has been Margaret Thatcher, who has left a lasting legacy that has driven us towards lower taxes and greater efficiency. Without her we’d all be living in some French bloody unemployed republic.

 

Michael O'Leary

October 31st, 2012.

 

TRC

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