Michael O'leary

CEO -- Ryanair -- Ireland

Europe's air-travel industry is among the world's most hidebound and overregulated. But Michael O'Leary, 39, is doing his utmost to change that. He calls it "taking on the rip-off artists." The former property developer and tax consultant took over bankrupt Ryanair in 1991. Now, the Dublin carrier boasts one of the industry's best profit margins: In 1999, when most European airlines struggled, Ryanair earned pretax profits of $51.8 million on revenues of $264 million.

O'Leary's formula is deceptively simple: He offers no-frills flights to European destinations, including Malmo, Sweden and Hamburg, Germany, from Luton and Stansted airports in the suburbs north of London. He has also brought fares sharply down. When Ryanair started flying to Venice last year, the lowest round-trip fare available midweek on British Airways PLC was $815. On Ryanair: $147.

O'Leary's goal is to bring air travel within financial reach of more Europeans--and to make money at it. Ryanair, Europe's eighth-largest airline, carried 6 million passengers in 1999. O'Leary plans to double that in five years. "We can make airline travel affordable for the 50% of Europeans who now can't afford to fly," he says.

O'Leary joined Ryanair in 1991 as personal assistant to the company's founder, Tony Ryan. The then-privately owned carrier, which was founded in 1985, was bleeding money. It had gone through nearly all of its startup capital of $30 million. Shortly after joining the company, O'Leary traveled to the U.S. to visit Southwest Airlines Co., the low-frills American carrier. After that trip, O'Leary persuaded the Ryans to overhaul their failing airline's strategy.

O'Leary set about immediately cutting routes, from more than 30 to 6, and eliminating frills. Then, he launched Ryanair's first cut-rate flight--with passengers paying extra for food and drinks--from London to Dublin for a round-trip midweek fare of $90. That compared with $300 on Aer Lingus and British Airways. Since that first flight in 1991, Ryanair has gone further, by cutting sales of peanuts and coffee, to minimize turnaround time on the ground. At 25 minutes, it's the fastest in the business. Meanwhile, by flying to secondary airports such as Luton rather than Heathrow, Ryanair cuts down on landing charges. And the airline controls training costs by flying only Boeing 737s.

The Ryan family rewarded O'Leary by making him CEO in 1994 and giving him a 25% stake in the company. Now, O'Leary calls the shots from his sparsely decorated Dublin office, where he works in jeans and shirtsleeves. That sets the tone for the company's culture. Ryanair's 1,200 employees receive relatively low basic salaries but high productivity bonuses. Employees can also participate in a share-options scheme after a year with the company--an innovative benefit in Ireland.

O'Leary's tough line on costs has stirred some labor trouble. In March, 1998, 35 baggage handlers launched a strike in an effort to get Ryanair to recognize their union. Dublin airport was closed for a day for the first time in its history, and Irish Prime Minister Bertie Ahern harshly criticized O'Leary. Instead of backing down, the Ryanair CEO helped unload baggage himself, along with other employees. Now, O'Leary hires baggage handlers on contracts running less than 12 months, though he says he would recognize a union if the majority of employees demanded one.

COST-CONSCIOUS CUSTOMERS. O'Leary is also always looking to cut airport costs. He's currently battling the Dublin airport over high charges. He is gradually shifting more operations to Britain's smaller airports, where the passenger base is larger than Ireland's. Some 55% of Ryanair's passengers now originate in Britain. While Ryanair has become a fixture for those who want low-cost flights to Spanish or French resorts from North London, about half the airline's passengers are businesspeople trying to keep spending down.

As for O'Leary's personal finances, he's doing just fine. His net worth is estimated at $30 million, thanks mostly to Ryanair's successful initial public offering on the London, Dublin, and Nasdaq exchanges in 1997. That's quite a change from his boyhood beginnings on a farm in the midlands of Ireland.

As a hobby, O'Leary raises Black Angus cattle on a farm he owns. But it's Ryanair that gets most of his attention as he looks for new ways to wring profits from one of Europe's most demanding industries.

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