September 2022, Virtual
September 29 2022, Virtual
Now in its 27th year, the Business Travel Awards
Is Michael O'Leary going off his head or is the spending of ”160m ($301m) of his shareholders' money for 16% of Aer Lingus an incidental for the Ryanair bottom line? Is he serious or is it just another very expensive publicity stunt?
When it comes to grabbing the headlines O'Leary is beginning to reach out towards the international acclaim of another flying person Charles Lindbergh, and in some ways is just as controversial.
There is another parallel. Both started out as quiet professional men, one as an accountant, the other a pilot. Then fame overtook them.
Ryanair's audacious plan to take over the former national airline of the Irish state is the third in a series of much promoted tactical moves, one of which is already a disaster, one which most people are sceptical about, and now another which has not met with universal joy. Only the short-term investors, those that have already sold their shares to O'Leary, have made any money.
With his usual ballyhoo the good Michael was last year pontificating about his laptop video machines and how the whole world (at least Ryanair flyers) would be hiring these units and watching Airplane and the latest hit movies. He forgot that most of his flights were less than 90 minutes and that the majority of feature films ran to two hours plus.
Next up was the in-flight telephone "at affordable prices". Pity the two passengers who find that the centre seat occupant spends the whole flight making calls and talking. One would soon expect Air Berlin to be advertising "Fly on a Quiet Airline!" It is a big turnoff. ABTN predicts an outbreak of air rage. And even more publicity for the airline from the Emerald Isle.
Just as the bid could have been seen as predictable, so has been the reaction. ”No” says the Irish government, a 30% shareholder. ”No” says the board of Aer Lingus. And you can be pretty certain ”no” says Aer Lingus' staff.
One thing is for sure, the lawyers will make a great deal of money. O'Leary cannot this time take his usual short cuts by asking for reduced landing fees, infrastructure and promotional aid. He needs real money. Lincoln Inn Fields does not come cheap. Its Dublin equivalent will do him no favours either.
This takeover is opposed by some serious players who effectively are a bottomless pit when it comes to finance and the national interest. Perhaps Michael should have made bids for Olympic Airways and Alitalia, both going nowhere and protected. Dublin also has many friends in Brussels who can make the buyout virtually impossible.
Now it could be argued that the takeover move might set some minds thinking in other quarters, perhaps other airlines.
That one is a no-go too. British Airways clearly had that in mind but just took over the chief executive, Willie Walsh. It was cheaper too. Swissair saw the purchase of Sabena as a short cut way into the EU. Neither carrier exists today. Even Emirates, with unlimited funds, has only invested in Sri Lankan Airlines, not the biggest player in the game.
Singapore Airlines, perhaps the world's most successful airline at this time, more or less acquired Air New Zealand, only to see it flounder. It tried another partnership, this time with Virgin Atlantic, and whilst from a financial point of view this may be successful, Sir Richard Branson, Steve Ridgeway et al, are still in command.
Ask any journalist about a Ryanair press release and you will be told. Read it once. Read it twice. And still check it out. A ”300m ($564m) investment does not actually mean coughing up with that sort of dough.
What it means is paying the costs for two aircraft based at an airport for a year. Perhaps ”3m ($5.64m) at the most. Mr O'Leary does not actually have 271 aircraft (that is supposed to be in 2015), nor even the 131 the press office will tell you (that is for April 2007). The real figure is about 112. It makes it a very big European airline but medium size as far as the US is concerned.
Why does O'Leary want Aer Lingus? The Heathrow slots, just maybe? The long haul services”not in his thinking up to now, the 17 routes that clash”a good case. Or Ego?
There can be little doubt that Michael O'Leary and Ryanair, in its third incarnation, has done a tremendous amount of good in bringing down the prices of air travel, significantly expanding the market and showing up the inefficiencies of the legacy airlines. That O'Leary has often been a vulgar, crude and offensive showman is for others to judge. The Ryanair takeover of Aer Lingus is a non-starter.
By Malcolm Ginsberg
Editor in chief