Why Michael O'Leary Is No Local Hero (int'l edition)

Within Europe, Ryanair CEO Michael O'Leary is a popular guy. Not a week goes by without a new pitch from some European politician hoping to persuade the Irish carrier to begin servicing an airport in his constituency. And in the City, London's financial district, O'Leary's straight talk and stellar financial results have earned him a loyal following. But it's a different story back in Ireland, where O'Leary is viewed with a mix of envy and suspicion.

Ryanair may be one of Ireland's top 10 listed companies, but its CEO is no hometown hero. It's not the controversial ads depicting the Pope touting Ryanair fares that have hurt O'Leary's image in Catholic Ireland. And it's certainly not the low airfares. The real problem seems to be O'Leary's success. In Ireland, entrepreneurs don't hold the same cachet as they do in the U.S. And newfound wealth generally is treated with apprehension. Indeed, every time O'Leary sells even the smallest amount of his nearly 8% stake in the airline, he's lambasted by the press which accuses him of "flogging off shares" while expecting his investors to sit tight.

It wasn't always that way. In the early years, the company's plucky underdog image played well among the Irish. But now that it has become bigger and more profitable than national carrier Aer Lingus, the airline is not cut any slack. "O'Leary and Ryanair are the strongest evidence of truth in the adage there's no such thing as bad publicity," sniped Ireland's Sunday Tribune back in February.

BITTER UNIONS. It's O'Leary's tough stance on costs that have gotten him into the most trouble at home. His run-ins with the country's powerful labor unions have irked the largely pro-labor Irish press. In 1998, he refused to recognize the airline's baggage handlers' union and paid for it in the resulting flurry of negative coverage. Shortly afterward, Prime Minister Bertie Ahern publicly attacked O'Leary and Ryanair for practicing "tooth-and-claw capitalism."

Indeed, Ireland is the one trouble spot in O'Leary's aggressive expansion plans. Those plans depend on securing favorable long-term deals with airports in exchange for bringing in increased traffic. He has tried unsuccessfully to persuade the state-owned airport authority, Aer Rianta, which also owns Aer Lingus, to offer it the same kind of long-term deals it has secured at lesser known airports in Europe. "Since 1997, our passenger numbers and profits have trebled, but none of that growth has been in Ireland," O'Leary says. "Why? Because the costs here are simply too high."

As a result, Ryanair has scaled back its operations in Dublin. It expanded first at London's Stanstead airport and more recently at Brussels' Charleroi, Ryanair's first Continental base. "The deal we got there blows [Aer Rianta] away," O'Leary says. Analysts estimate Ryanair's airport charges in Europe average $1.50 per passenger compared with $13 at Dublin Airport.

Now, O'Leary wants a similar offer from Irish airport authorities. He justifies his demand by saying Ryanair is the main reason the amount of traffic at Dublin Airport has dramatically increased in the past decade. "In many respects, we created the Irish tourism boom that took place between 1985 to 1995, through low fares and increased competition," he says.

CONTINENTAL DRIFT. But Aer Rianta isn't swayed. "Sure, they've been phenomenally successful and have contributed to the growth of Dublin Airport," says Aer Rianta spokesman Flan Clune. "But we just can't rewrite our rules to suit Ryanair." That hasn't stopped O'Leary from trying. He's adamant he'll keep on fighting until Aer Rianta gives in.

The longer the battle continues, however, the greater the risk that Ryanair turns its home country into an outpost. Over the past four years, Ryanair has not expanded its service and operations in Ireland at all. For a country heavily dependent upon revenues from tourism, that's bad news. If Ryanair expands only on the Continent, Ireland stands to lose jobs, potential tourism income from visiting Europeans, and the business of one of the few super-successful entrepreneurs the country has ever seen.

By Kerry Capell in Dublin

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