O'Leary: 'UK heading for recession'

Michael O'Leary today forecast that the UK was heading for a recession and that this would be “great for the aviation industry”.

Ryanair chief executive Michael O’Leary admitted that his airline’s profits could dip 50% this year.

But he added that Ryanair fares would come down and that people would continue to want to fly even through a recession.

Mr O’Leary also said his carrier would continue to increase charges for those checking in luggage until they chose to fly with carry-on bags only.

He said: “I don’t know why we are trying to avert a recession. We need a recession. I think it would be great for the aviation industry.”

Mr O’Leary went on: “A recession will get rid of environmental taxes and a lot of the environmental nonsense that’s talked about regarding aviation.”

He added that recession would also “end the regulatory incompetence” which he sees as harming the airline in terms of what it is charged for using Stansted and Dublin airports.

“A recession is now likely, I don’t think it can be averted by reducing interest rates. We would welcome a good, deep recession for 12-18 months.

“During recessions travel does not get cut back but people look for cheaper alternatives. If we get a recession I don’t see people cutting back on the amount of flying they do.”

Mr O’Leary was speaking after Ryanair announced it made an adjusted after-tax profit of €35m in the period October-December 2007 – 27% down on the same period in 2006.

He warned that the European airline sector was facing the possibility of a “perfect storm” of higher oil prices, poor consumer demand, weaker sterling and higher airport costs.

The economic climate could lead to some low cost competitors facing problems but Ryanair was determined to slash fares

Mr O’Leary also said that Ryanair was expected to reduce the number of winter flights it made at Dublin airport and possibly also at Stansted.

He again stressed that Ryanair would never introduce fuel surcharges and said those who grumbled about the charges for checked-in luggage should “stop complaining” and arrange things so they could travel with hand luggage only.

Ryanair hoped to increase annual passenger levels by 19% to 50 million in 2008, rising as high as 83 million by 2012, he said.

The no-frills carrier also planned to double its aircraft numbers and its profits by 2012, he added.