O’Leary set to ground planes and freeze pay

Jun 4 2008 by Iain Laing, The Journal

BUDGET airline Ryanair has warned that its fares may have to rise 5% this year as costs increase. Chief executive Michael O’Leary said the airline would be grounding up to 20 aircraft this winter and forecast some airlines would go bust if oil stayed at $130 a barrel.

But he said Ryanair would never introduce fuel surcharges, even if oil reached $500 a barrel.

Mr O’Leary also launched fresh attacks on aviation regulator the Civil Aviation Authority and airport operator BAA.

He described the CAA as “haplessly useless and incompetent” and added that BAA airports were “inefficiently designed, inefficiently built and abominable”.

Mr O’Leary was speaking in London as Ryanair unveiled its 2007/08 pre-tax profits, which rose 17% to £419m. He said the company would break even if the oil price remained at $130, but if it rose to, say, $140 or $150, it would lose money. He said fuel surcharges introduced by carriers such as British Airways were “completely unjustified” and “just a scam” to take more money from the travelling public.

Mr O’Leary said Ryanair would probably ground 12 to 15 aircraft at Stansted Airport and five to seven at Dublin next December, January and February.

He said that this would not mean cuts in routes but merely a reduction in frequency of flights to some places.

He said the present oil price was unsustainable and might even go up before coming down. There was likely to be a major recession and this would mean demand for oil would fall.

Describing the huge rise in prices of late, Mr O’Leary said it was irrational.

“There is no fundamental demand and supply issue. There is no shortage of oil and there are no queues at petrol stations.”

Mr O’Leary said Ryanair had carried 50.9 million passengers during the year – 20% more than last year. This was expected to rise another 17% to 59 million this financial year and could go as high as 82 million a year by 2012.

The carrier currently has 163 aircraft and this could rise to 262 by 2012. Mr O’Leary said he and other top Ryanair managers were having their pay frozen this year.

The airline’s average fare for the 12 months to the end of last March, including all charges, was £35, 1% down on the previous year.

He rejected any suggestion the charges Ryanair makes for carrying luggage for some passengers equated in any way to fuel surcharges.

He said: “You may ask if this is a fuel surcharge in any other name. No, it is not.

“You cannot avoid fuel surcharges, but you can avoid some of our charges by travelling with less luggage and by checking in online.”