O’Leary pledge to complete Ryanair’s world domination

Michael O’Leary, who built Ryanair into Europe’s biggest discount airline over two decades, pledged to stay another five years and render its dominance complete as competitors exit short-haul flying.

Ryanair will seize on the likely failure of major carriers such as Air France-KLM Group to earn profits on short routes and the withering of networks at Alitalia in Italy, Iberia in Spain and SAS in Scandinavia, the 52-year-old chief executive officer said in an interview in London.

Mr O’Leary, who has regularly promised to quit Ryanair “in a couple of years”, will boost the fleet to more than 400 jets by 2018 and aims to double the company’s €8.65bn market value over the same period. That could pave the way for low-cost transatlantic flying as demand for wide-body planes eases, making them cheaper, he said.

“There’s going to be a push for the legacy carriers to walk away from the loss-making, short-haul business, handing over more and more market share,” Mr O’Leary said. “The rate of change is going to speed up. The next five years look very interesting and exciting and therefore there is no reason for me to leave.”

Shares of Ryanair have posted a 114% price gain since May 2008 and closed at €6.12 yesterday, Air France-KLM, Europe’s biggest airline, has slumped 63% over the past five years and Deutsche Lufthansa of Germany, the No. 2, has declined 6.1%.

Only a handful of short-haul routes feeding profitable long-haul services will survive even at the biggest operators, while the likes of SAS and LOT Polish Airlines may be forced into a deeper retrenchment or collapse, Mr O’Leary said. Last year saw the failure of Barcelona- based Spanair and Hungary’s Malev, plus takeovers including IAG’s purchase of Lufthansa unit BMI, the second-biggest slot holder at London Heathrow.

Lufthansa spokesman Thomas Jachnow said it is “convinced” the expansion of Germanwings puts it in a good position within Europe, while IAG declined to comment and Air France-KLM didn’t respond to calls.

Under Mr O’Leary, Ryanair’s strategy of offering bargain- basement fares rendered profitable through the use of secondary airports and a minimum level of customer service has propelled it from 1.7m passengers in 1994 to 79m last year, with the company targeting 100m by Mar 2019.

“We’ve reinvented the European airline industry from this failed 50s and 60s model where you had to be rich to fly,” he said. “And what we’re going to do in the next five years is going to be even more revolutionary.”

Ryanair ordered 175 Boeing 737-800 single-aisle jets in March and has appointed a team to work on a follow-up deal to add a further 100 planes, most likely the US company’s new 737 Max model, giving a total list price of more than $20bn.

Mr O’Leary said he’ll also press Boeing to develop a model with a dozen or so more seats, perhaps through the removal of bulkheads and one of three lavatories.

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