Ryanair CEO: “Lufthansa Is Like A Crack Cocaine Junkie Looking For State Aid”

Filed Under: Other Airlines

Ryanair Group CEO Michael O’Leary is one of the most controversial guys in the airline industry. A few days ago I wrote about the views O’Leary has on blocking middle seats.

Well, he has a lot more to say, as it turns out.

Interview with Ryanair’s Michael O’Leary

O’Leary just had an interview with Sky News, where he talks about all kinds of topics. This is his first televised interview since the current pandemic started, and as you’d expect, he has quite a bit to say.

First of all, you can watch the interview here, if you’re interested:

I wanted to hit on a few of the highlights:

People don’t understand the refund issue

O’Leary argues that people don’t understand the scale of the refund issue in the airline industry:

  • In a normal month Ryanair processes about 10,000 refunds
  • In April the airline is dealing with 10 million refunds
  • The airline has a quarter of the usual staff working in refunds due to social distancing
  • O’Leary claims they have 10,000x the usual refunds right now, but in reality it’s 1,000x the usual refunds
  • It’s going to take the airline “many months” to get around to refunding everyone; they’re asking people to reschedule travel rather than get a refund in order to “ease the backlog” (hah)

Governments should pay for middle seats

Ryanair has stated that if middle seats need to be blocked on planes they won’t resume flying. According to O’Leary:

  • It delivers nothing in terms of social distancing since you’re still close to others, still have to get to the airport, still have to board and get off the plane, etc.
  • If governments want to force airlines to block middle seats then they should pay for them; for most airlines in Europe profit margins are 4-5% and load factors are 85%, so running a 60% load factor isn’t sustainable
  • Ryanair plans on requiring passengers to wear face masks and doing temperature checks on passengers

Layoffs could be coming in June

Ryanair has kept almost everyone in employment in April and May (thanks to payroll support schemes), but if the groundings continues into June, the airline will have to look at job losses.

O’Leary hopes that there will be a significant uptick in travel in late June or early July.

O’Leary on state aid OMG

Asked whether Lufthansa should get state aid, O’Leary said:

“Lufthansa is like a crack cocaine junkie looking for state aid. They’re already getting huge payroll support from the Germany government. What do you need more state aid for? We don’t have many other costs at the moment because we’re all grounded. They see this as an opportunity to get one last huge quantity of state aid so they can go around and buy up everyone when this is all over.”

There has been a lot of controversy around Virgin Atlantic’s bailout request, given Branson’s wealth and residency. How does O’Leary feel about that request?

“Virgin Atlantic is ridiculous. This is Branson’s second go at trying to fleece the British taxpayer for state aid. He tried this with Flybe. Now you have Virgin Atlantic, owned by Delta and a Caribbean island based non-resident billionaire. Frankly if he’s worried about Virgin he should write the check himself. It’s not like he’s short of money. Sitting in the Virgin Islands as a tax exile asking the British government to bail you out when you have more than sufficient resources to bail out Virgin Atlantic yourself isn’t something that should be considered.”

Bottom line

Um… wow.

I might not always agree with O’Leary, but:

  • He’s always outrageously fun and interesting to listen to
  • He provides some much needed balance to what we otherwise hear in the industry, both in terms of countering the rhetoric we otherwise hear, and also in terms of approaching problems in a different ways

What do you make of this O’Leary interview?

Comments
  1. The non UK resident owner of an airline asking for taxpayer’s help in bailing him out is really rich. You cant deny it. It really is a valid point.
    The middle seat issue is also a valid concern as anytime you fly economy there is no social distancing in security lines, during boarding etc.
    Mandatory mask is an interesting thought, who will enforce it. Years ago a seatmate decided she had to turn on her phone mid flight (when this was considered a NO-NO) to check the time. When I commented she berated me for the behavior of my special child (not really gregarious behavior, LOL),

  2. O’Leary once again is 100% on point! Lufthansa is asking the German state for 10 BILLION (!!!) Euros in state aid in addition to all the wages currently paid for and all the prepayments from customers that they are illegally withholding. On top they are doing it in a very arrogant way that screams that they see the state as their servant.

  3. Some of what he says seems fairly accurate (about social distancing in air travel + Lufthansa asking for state support), but otherwise lots of BS and fluff. EU regulatory bodies should be more active in supporting customer rights to refunds, especially when a host of airlines have asked for government support.

  4. “Significant uptick in travel in late June or early July” ??? He seems to be the one or crack.

    Apart from that comment, he does have a sensible point to make every now and then…its just that it gets drowned in the rest of the gibberish he says most of the time. Reminds of the CEO of an ME based airline.

  5. Am I the only one who would pay good money to see an Airline Industry Panel with both Akbar Al Baker and Michael O’Leary participating?

  6. We should take MOL one step further. Absolutely $0 for anything in the aviation sector. No money for plane makers, airlines, airports. Nothing.

    Airlines want money – get it from private lenders like everyone else. No one is willing to lend? Too bad.

  7. Why does it matter where the owner of a company resides? Virgin Atlantic employs many british people creating jobs and revenue and unless I’m missing something, I’m sure they’re paying taxes in Britain as well.

    Other than that, I like this O’Leary guy.

  8. What’s with the moderator approval requirement? That’s twice in three days now after never in the last decade or so.

  9. In the full interview he also was against bailout that are going on in the Scandinavian countries. Where he think the bailout are favoring SAS too much and Ryanair should get some money as well even while they don’t have any bases there and don’t have local licenses to operate. So some things are valid while a lot of his comment are apples to oranges comparisons as well as over optimistic assumptions.

  10. When you bailout an airline you are basically helping the owner unless you take equity. Yes, the airline has many UK employees but so do many International firms. He wants a bailout to rescue his equity.

  11. He’s entirely correct about the refund issue.

    Most passengers have absolutely no clue They believe you simply press a button

    Airlines have reduced staff and everyone has to work from home

    Last year Ryanair carried 146 million passengers. 12.16 million a month

    Say over 3 months 36 million people request refunds. It’s never happened before. Ever.

    How do you expect 36 million refunds to be processed ? You cannot process over 98000 a day

    And don’t forget in the case of many airlines tickets are purchased via travel agents /OTAs. For some it’s over 70%. Refunds have to be submitted via BSP or ARC

    In normal times a BSP refund could take 4-7 weeks

    Expedia for example , not only deal with airlines but hotels as well. Their staff are reduced and remote working.

    Try to remember in some countries staff are prohibited from going outside If they have several call centres around the world , many are now closed. The result is that the staff working are inundated with requests

    And Eu 261 states a refund within 7 days !

    Almost other business deals with so many people And you can discount banks or supermarkets

    Frontline staff are also being abused by passengers who don’t appreciate they are speaking to someone who may not have a job next week and is sitting in their home

    I’ve seen disgusting comments on social media with threats made to individuals.

    Almost every industry is affected here. We’re all in this together

    I would rather hear life can return to normal and wait for my refund

  12. I love crack cocaine. Do Germans smoke crack cocaine? Thought they would be more into ecstasy going to techno concerts.

  13. By estimate , EU regulators want Ryanair to process 3million refunds in 7 days or 18000 an hour.

    On the subject of VS , it’s a LOAN British staff paying taxes. What if it was your own business? Would you not try to save it ?

    All the negative comments here , I hope you don’t get your refund and your business fails

  14. this just broke —
    French government announces `historic’ 7 billion euros ($7.6 billion) aid package to save Air France.

  15. Look, here’s the thing, O’Leary says a lot of controversial things, but he does this on purpose fully well knowing it’s BS he saying. He views this as free advertisement for Ryanair, and you have to give it to him, because, Lucky is writing about it, it’s working. And there are few airline CEO’s or airlines that get so much attention in the mainstream media (which is what his customers read), his tactics work.

    Apart from that if we look at the facts, Michael O’Leary should be a very valued opinion in the airline industry If you cut through the BS.

    Ryanair is on of the most profitable Airlines in Europe and probably not far off in the world. On top of that it’s the biggest airline in Europe (passengers carried and fleet size) and not Lufthansa. It’s only the Lufthansa group that’s bigger than Ryanair, but that’s multiple airlines compared to 1 airline (not counting Lauda etc.)

    Ryanair is a huge, profitable airline, for a big part thanks to O’Leary, so he knows what he’s talking about at the end of the day, even if he doesn’t show it.

  16. He’s right about Lufthansa. Once this is over, LH Group will be snapping up carriers left and right. It’s dog eat dog and LH is determined in the end to be a one stop airline for the entire European continent. That’s the aim.

  17. @Andre and that’s just the French govt… the Dutch one is supposedly expected to inject approximately another 2 billion € into KLM

  18. So I don’t understand this. If you blame airlines for not saving funds for bad times. Why didn’t Ryanair have refund departments ready for bad times. Oh yes because Ryanair never do refunds since the fees are so high the ticket is worthless for refunds.

    So while other airlines are giving out refunds, Ryanair can’t because of (planned) staff shortage.
    So while the rest need tax payer bailout, Ryanair passengers bailed them out (lavatory fee included).
    So while others are caring about health and practice distancing, Ryanair cares about money and wants to sell middle seats.
    So while others want bailout to protect jobs, Ryanair wants to protect its profit by destroying jobs.

    One thing Michael O’Leary is too dumb to realize is Ryanair looks in good shape because their FY ended in March So hardly any virus effect.
    By June this year Michael O’Leary will be cursing everybody.

    Michael O’Leary is a step beyond Akbar Al Baker. He is like Richard Branson on Crack Cocaine looking for attention.

  19. Well, he’s right as far as Virgin Atlantic is concerned. You can throw Virgin Australia into that as well. 10% owned by Branson, the rest is about 20% by Etihad, 20% Singapore Airlines and 40% owned by two Chinese companies that are in turn, majority owned by the CCP. They’ve got plenty of money to keep that airline afloat and it’s simply the CCP attempting to squeeze money out of the west in an underhand manner.
    It’s the same with Swissport, who recently had their hand out for government funds. They are 100% owned by a Chinese company who like all other Chinese companies are majority owned by the CCP. It’s disgusting.

    As for his comments on Lufthansa, well I’m sure they’d rather be a crack junkie than a $2 smack addicted hooker.

  20. Let’s put things in perspective here. Lufty wants 10 billion euros. The US airline bailout is $25BN for ALL of the US carriers AND *airports* combined. Delta AND American are both larger than Lufty.

    This is where the unions need to be helping their hosts rather than act like the parasites they are. I don’t think there’s any rational flight crew member who wouldn’t support some sort of reduction in pay considering there’s been a 90%+ reduction in revenue and flights.

  21. @Richard, you are correct about Swissport. The Swiss government has not yet bailed out Swiss airlines as they are owned by German Lufthansa and debate has been swirling on that front. Bailout essentially a German company. This globalization racket has really been a huge curse.

    Worldwide the Chinese Communist Party owns thousands of western companies. Consider the nightmare that China owns Smithfield pork meats in the U.S. – bought them about 6 years ago – and Obama gave the green light. Our medicines and other key products either come out of mainland China or are controlled by the buying out of key sectors and industries/businesses in the West. Stealth takeover, but not really secret. The corporate world and governments sold out the West long ago.

    Short of a revolt by the masses to take back control of their own countries, globalization will enslave them for eternity. The Communist Chinese are playing a clever and long game of hegemony. It couldn’t have been done though without the greed and cooperation of key players within each country that they have sought to influence and control. Look at what they have done in Africa and the island nations in the Pacific (Oceania). Total buying out of entire countries. The key method in the smaller countries is to simply bribe the leaders. Works every time. The leaders retire and set up their homes in Europe, U.S. Australia, Canada. We’ve seen this over decades by dictators and kleptocrats in Africa. It’s now worldwide.

  22. Coming from a man who’s been an expert at fleecing customers since Ryanair’s creation, this is too comical. What about those unpublished instructions, years ago, to let passengers check for free any weight they wished on the OUTBOUND flight, only to charge them 50 euros / kg per excess kilo on the RETURNING flight?

    I take great pride on never having flown Ryanair, except twice at the time they had a promotion, ticket price 1 euro out of Europe and 1 UKL out of Britain, with the above baggage instructions in place. I bought 2 RTs Luton to Deauville at 2 UKL + 2 euros, checked two suitcases for free on the 2 outbound flights and never used the return portions. Am I the only customer to have ever made money flying Ryanair ?

  23. O’Leary is just another day cat liar have you tried to get a refund what a joke the sooner Ryanair are held to account by the EU the better, they appear to have the EU intheir pocket. Guess O,Leary knows who to pay. Believe nothing that rat says.

  24. Why the hell does that matter where Branson resides?! Any just about any rich person would optimise his/her taxes when possible. Are we talking about Branson or Virgin Atlantic?
    Virgin Atlantic is a UK based company.
    Virgin Atlantic pays all the taxes in the UK.
    Virgin Atlantic provides thousands well paid jobs in the UK (and in ok times doesn’t ask anyone to help).
    and BINGO Virgin Groups doesn’t ask for taxpayer money to be directly given from the Treasury to the company (hello US), only for a government guarantee on a commercial loan.

    I assume UK Government should act in the best interests of the public. It’s 100% in the best interest of the public to keep VS afloat and not have a sole BA in the market.

    All of the above is even more true for Australia. It’s already quite expensive to fly within Australia (much more expensive than in the US). The government should step in and not let QF to become the sole player.

  25. He is 10000000% right.
    Lufthansa can go bust as far as I am concerned and Virgin Atlantic and Branson are a disgrace to UK. How can you run businesses that loose cash flow after a week of lockdown. Total waste of space. Say what you want about low cost Ryanair or Wizzair but at lease they are not the first to ask for help because they run profitable businesses. Even Easyjet proves to be run by muppets.

  26. @ Christian — In your previous comment, there was a typo in your email address, so the commenting system thought you were a new user. One of the others had a word that people sometimes use in a way that violates our commenting policy, so it went to the manual approval queue.

    Nothing nefarious, and we do try to approve everything as quickly as possible.

  27. @denis if you live in Australia you will know the government has provided $AU1billion in relief packages across the airline industry. Yes we should have 2 main airlines but why should the government financially support virgin Australia when 1. They’ve barely paid any taxes here 2. 90% is foreign owned and not one of the shareholders are putting money in – just lije branson doesn’t want to put his own money into virgin Atlantic 3. Its been badly managed 4. Qantas managed to refinance on its own.

  28. Isn’t RyanAir just a bigger Spirit Airlines where they nickel and dime, cram ungodly amounts of people on plane, and have terrible customer service? FYI – that’s why they are so profitable. Airlines make more money nickel and diming than from tickets. Lufthansa and non-ultra low cost airlines aren’t anything to write about, but they have a lot more fees included in ticket price. You can’t have it both ways, folks. If you want a somewhat normal experience flying you gotta fly a legacy carrier which spends more on inflight services and high end customers. They constantly have to invest and upgrade and compete. Low cost carriers never do anything different allowing them to save and make more money while paying low wages and giving you non-reclining seats and no onboard service. If we let all the airlines go bankrupt, the entire world would be ran like Spirit and RyanAir. All these people and their religious views of tiers and status would be in for a rude awakening.

  29. I do have to say that I feel very sorry for the positions that the Ryanair staff are in right now, it’s horrible but Michael O’Leary is a complete crack pot! Hopefully the carrier makes it for the sake of it’s regular working employees!

  30. Correct on every point! Speaking of points, do we really know the true value of any travel currency anymore? When was the last time any of us redeemed for travel? The travel world has changed forever. We just don’t know where it’s going. O’Leary is a realist, operating a bus service.

  31. Total rubbish

    Issuing refunds to the card used to buy the ticket in the first place should be a totally automated process.

    This is the typical nickel and dime bullshit that Ryanair are famous for

  32. Some show they don’t understand the basics of Germany’s government aid. It’s a government-backed LOAN from a government-owned bank. It’s not FREE money, LH must pay back the principal plus interest. Spohr stated their interest payments will amount to 1 billion p.a.

  33. @David F: Sign me up for that show. Now if we could coax Bob Crandall out of retirement and bring back the ghost of Herb Kelleher it would be the greatest show on earth.
    Michel is 100% right on most points. All of those berating FR about refunds obviously have not read their conditions of carriage where it is made crystal clear that there will be no refunds under any circumstance and it is only in the higher fare categories that one should expect a voucher.
    I have an unabashed admiration for MOL as underneath all the BS is a very shrewd businessman.
    On the subject of LH does anyone remember the adventures of the late unlamented SR or more recently more recently EY who went around gobbling up airlines like a demented version of the old Pacman game?

  34. @skedguy
    “coax Bob Crandall out of retirement and bring back the ghost of Herb Kelleher it would be the greatest show on earth.”

    LOL, You are probably a Texan. I don’t think Herb Kelleher will fit well in that crazy panel. Bob Crandall definitely will and also add our all time favorite, Doug Parker.

    Let’s put them in UFC.

  35. In Germany Lufthansa is like a crack addict begging the reluctant drug dealer for just one more hit.

    In Italy Alitalia is like a crack addict who keeps getting showered with all the crack it wants by the enthusiastic drug dealer. Without even having to beg for it!

  36. @Dan – I have never flown Spirit , but I fly Ryan Air about 6 times a year from London to Paphos where I live . It is a good airline , tries hard and most of the crew are lovely and helpful. They are mostly EU nationals, young and keen to develop their experience . Michael O Leary is spot on and can identify an idiot immediately . He runs a good airline and I like his style . Ryan Air will survive whilst others will not .

    Which will be the first US airline to go bankrupt or will the US government bail them out ?

  37. I understand much of what he says and agree with much. But the idea “people don’t understand the refund issue” is a pathetic attempt at moving blame from him to us. Simply put: if you are having 1000X time number of refunds, then higher more people since there are many out there needing work. And please spare me with the “systems” can’t handle the numbers, I suggest you hire more IT and adapt your system to move from needing more to book tickets to handling refunds.

  38. It’s been said before. One rule for EU and another for Germany.

    Those who have blogged it, you’re right Germany puts LH (or more precisely the LH group) into funds to create the mopping up sponge later.

    The Chinese may well have an agenda, but they learnt it from German stealth.

    At least you know where you are with the Chinese, not this behind your back EU unity nonsense.

  39. I never flew Ryan Air because I believe the CEO does not care about customers neither does he care about people who work for him. He cares about profit, which is fair enough, he is a businessman. But what kind of businessman ? This is turbo-capitalism at ist best, squeeze squeeze squeeze, until there is no more drop to be squeezed. I rather pay a little bit more for my air-fare and have a seat, have checked bags, a decent customer service. I don’t want to be treated like cattle. Hence I don’t care what this stingy freak has to say.

  40. Forget cheap flights . . . I wouldn’t fly Ryanair again if they paid me . . . Good riddance Mr O’Leary, and your dreary airline.

  41. Well he’s nothing if not entertaining. He is spot on about Virgin though – Branson has misplayed his hand and as a non-resident who pays no taxes here, why on earth should the UK government bail him out?

    They should request a buyout of his shares, if they want to keep the company running, and nationalise it for a (Hopefully) short period.

    It would be rather ironic, after all his complaints of BA being a proxy for the government…

  42. He made a good point about the aid for Lufthansa. Specifically how if they receive a large enough package from the German government they will just try to buy up much of the competition in Europe. O’Leary however was unusually quiet about IAG. Normally he has something to say about them but not today. Maybe he’s realised that IAG had the correct idea of keeping several billion to one side just in case.

  43. Hang on, the refund thing is a red herring. This is 2020, you could fairly easily either automate the refund process (all bookings are electronic) or allow people to do it online themselves. RA already has the ability to cancel and change flights online, so this should be straightforward. Implying that this will be done one by one, manually, is silly. The real reason is they need to delay that cash going out of the Airline for as long as possible.

    I totally agree about his other comments, Virgin Atlantic is owned by Delta and Air France, who both got massive bailouts from their governments. VA is a dinosaur airline that needs to go away and be replaced to be honest. It has rarely made money.

    I can’t understand why the Belgian government is bailing out SN as they are owned by LH, why is it their problem. I also thought it was illegal in the EU for a country to artificially support a business, preventing natural Darwin economics from happening. If Airlines are essential for the country then they should be state owned. Supporting inefficient boards and CEO’s is not the right way to use tax payers money.

  44. @ UpperDeckJohnny…

    Well not quite… The EU rule is now being transgressed by Alitalia, Air France, KLM, it appears
    Lufthansa and then undoubtebly its offsprings, LX, OS and SN. BA/IB will surely follow and A3 has stated it will demand a bailout.

    It looks more to me that the EU regulation won’t have a leg to stand on anymore, especially now that airlines openly say they’ll reneg on EC261/04.

    And that’s only for the airlines sector. The EU concept, perfectly legit when it applied to 6, then 9 and maybe up to 12 countries, was doomed to make no sense when it involved 28, then 27 members. They are probably done for.

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