O’Leary: Aer Lingus’s end is near

RYANAIR boss Michael O’Leary yesterday sensationally predicted that Aer Lingus will go out of business within the next two years if it doesn’t manage to curb costs and improve its management.

“That airline is going bust, within the next 18 months to two years, if its current rate of mismanagement and the present drain on costs continues,” he said.

Mr O’Leary was speaking as his company made its latest call on the Government to scrap the controversial €10 travel tax on flights out of Ireland and to lower high passenger charges at the country’s three Dublin Airport Authority (DAA)-operated airports of Dublin, Cork and Shannon.

He said that Ryanair could add two million passengers to Dublin Airport if the tax was scrapped; adding that the levy is dissuading people from travelling to Ireland.

He forecast that 3,000 direct jobs at Dublin Airport were at risk due to continued passenger erosion resulting from consumer charges and the travel tax. Passenger numbers fell – on a year-on-year basis – by 11% in the first quarter of this year, at Dublin Airport alone.

Mr O’Leary reiterated the call for the tax to be a percentage levy on the individual costs of flights, rather than being one flat percentage. He bemoaned Government for failing to listen to Ryanair about the threat to the Irish tourism industry, just as it ignored its takeover plan for Aer Lingus.

Back on the subject of Aer Lingus, Mr O’Leary said the airline – for which Ryanair has made two failed takeover bids in the last three years and in which it still holds a 29% stake – needs to cut costs and find a large partner to help grow its business

“It needs to significantly expand its short-haul operations and its long-haul business; because when you contract short-haul it adds costs to the business,” he said.

He also said Ryanair is still waiting an outcome from its formal complaints about Aer Lingus to the London Stock Exchange, Britain’s Financial Services Authority and the British Takeover Panel, but said it had received acknowledgement of its receipt.

Ryanair accused Aer Lingus, earlier this year, of “market manipulation” after it posted heavy losses for 2008, following earlier claims to shareholders that it would make a profit. Ryanair is now set to call for significant reductions in non-executive directors salaries at Aer Lingus at its annual general meeting on June 5.

Mr O’Leary said yesterday, that Aer Lingus’s recent move to open a new European hub at Gatwick Airport was failing already and was just a “panic move” to ward off the last Ryanair takeover bid.

Aer Lingus said yesterday evening it had no comment to make on Ryanair’s latest remarks.