If O’Leary ran the Government, the nation would be flying high

DID you happen to see Michael O’Leary on the Late Late show last week?

Friday night is normally my David Cameron “date night”. The missus had gone out on a deferred teachers’ Christmas night out, so I watched the first part, before switching to Graham Norton. Ryanair’s CEO gave a tour de force performance. The success story that is Ryanair has not been properly acknowledged or applauded. He has been at the helm since 1994. Passenger numbers totalled 72m in 2010 and 76.4m last year. This compares to British Airways’ 30m passengers and Aer Lingus’ 9.3m annual throughput.

He aims to attain 80m this year and 100m travellers in the next few years. The PLC’s balance sheet is equally impressive. For the third-quarter of 2012 up to the end of September, there were three month profits of €250m on sales of €991m. Despite rising fuel prices and volcanic ash plumes, the airline continues its relentless achievements of growth and profitability. He typically missed no PR opportunity to reinforce why Ryanair gains market share. Price and punctuality are key attractions. Beneath his abrasive style, core values and principles apply to his management style. Foremost is pursuit of efficiency and productivity. A new aeroplane costs €70m, so he wants it to earn revenue for maximum hours per day (6am to 11pm).

Asset utilisation is a top technique. If you could remove toilets and replace them with seats or get passengers to stand, creating more space, this would generate more cash. Despite low fares, Ryanair’s gross profit margin is 20%. Many other carriers attempted the low-cost model, only to crash and burn in business failure. His work ethic, competitive ethos, marketing flair, commercial aggression and discipline have made him best entrepreneur of his generation. This sector has seen horrendous losses in Air France, British Airways, Alitalia and Lufthansa within Europe. Many US carriers ended up in Chapter 11 insolvency. Behind controversial soundbites, savvy business principles are deployed — such as using nearly all Boeing 737 aircraft to reduce engineering and maintenance costs.

Ryanair, like other Irish global multinationals (eg CRH, Paddy Power, Kerry foods, Glanbia, Diageo, etc) is procuring growth outside Ireland. A global carrier has no need to base itself on this island. Yet Michael O’Leary remains a tax resident and wants to boost Irish tourism. His proposals to create 5m extra passengers annually here have been officially rejected. They have been dismissed as self-serving, ie denigration of Dublin Airport Authority and abolition of the travel tax. This domestic rejection by politicians and bureaucrats has been repeatedly asserted by successive governments for over a decade.

In the rest of Europe, Ryanair is met with inviting incentives and active “open skies” deregulation. Antipathy to O’Leary extends beyond begrudgery. There’s open hostility. His detractors accuse him of arrogance, trade union bashing, public sector insensitivity and greed. He is portrayed as a hate figure.

At a time of unprecedented pessimism in the country, let’s compare and contrast the track record of O’Leary and his critics. In the context of zero growth, paralysed public finances and endemic emigration his remarkable entrepreneurial performance transcends our political masters. His straight talking about the culture of the public service has enormous credibility.

He can’t understand or abide sustained levels of absenteeism of 11 days per year as an employee entitlement. Annual holiday leave in excess of 30 days annually, is anathema. Our leaders are content to continue to turn a blind eye to uncertified sick leave as part of a job perk. One semi-state company still operates on the basis of a four-day standard working week, yet seeks more taxpayer support.

If the Michael O’Leary School of Management ran the government instead of Enda Kenny and Eamon Gilmore, we might have different prospects. Take the Croke Park agreement — the central selling point is that it will procure an orderly reduction in public service numbers, in the ambience of industrial peace. Around 6,500 public servants are set to retire at the end of this month. Generous lump sums and pensions will be paid on the basis of previous higher salaries. This exodus will involve key frontline public service vacancies. The notion is that this agreement will result in redeployment of remaining personnel, thereby incurring greater efficiencies and savings.

This will prove to be a con job. A neurosurgeon, secondary school German teacher or forensic garda detective can’t be replaced by supernumerary clerical officers or janitors. It’s inevitable these vacated posts will be filled by specialist skilled recruits.

We have been sold this dubious deal on the basis of protected jobs and incomes in a trade-off for flexibility. This fallacy will be exposed as holes are created in the delivery of essential public services. Private businesses decide to axe functions and services, resulting in redundancies.

Such joined up thinking hasn’t happened in government. The outcome will be inertia and U-turns on the recruitment embargo, resulting in minimal savings to the taxpayer. O’Leary wouldn’t tolerate this protectionist nonsense. In classrooms across the country we’re about to witness the same teachers being hired to do identical work from which they have retired. Some €40m has already been spent on rehiring on temporary contracts, former public servants who availed of exit schemes. What a joke — on us taxpaying fools.

The same derisory fun and games is at play in the semi-state sector. Both the Programme for government (€2bn) and the bailout deal (€4bn) promised privatisation proceeds. The Cabinet signed off on a proposal to sell 25% of the ESB. This decision confounded sectoral energy analysts and regulators. EU and national policy objectives have repeatedly stated that there would be separation between electricity generating operators and the transmission grid, which is vital monopoly infrastructure. The latter is a licence to print money. The former can be sourced through oil, gas, wind, other renewables or interconnector on a competitive basis. FG/Labour deemed the sale was on the basis of the combined entity.

This irrational proposal is now to be dropped, with Bord Gáis and Coillte selected instead for partial sale. Again, only 25% shareholding is to be made available. This makes no sense. Who would want a minority stake that is captive and wields no overall control? These are disingenuous circular games to avoid conflict with allies in public sector unions.

This government increasingly resembles a weak parent, who is unwilling to provide tough love. The U-turns on disability allowances, community employment scheme places and disadvantaged schools have sent out a clear signal to vested interests that the Cabinet is malleable.

The systemic political failings of constituency clientelism are matched by short-termism. Revenue from Irish water, TV household levy and residential property tax are all deferred to 2014. That’s the year the Exchequer has to find €24bn of debt repayments. Enda and Eamon have learned from Bertie and Brian, who now don’t have to worry about these issues, any more.

The nation needs the clarity, commonsense, determination and sense of purpose of Michael O’Leary. What will we get? Denigration. No wonder we’re mired in mediocrity.