Morning folks, and welcome to today's episode called "Michael O'Leary: The Jumped-Up Paddy Who Doesn't Give a Shit" — and that's how O'Leary has described himself. His words, not mine.
I chose this episode not only because it's brilliant, but also because my youngest listener and favourite nephew has been bugging me to do the story of O'Leary for a long time now.
I'll start with an excerpt from a profile the journalist Philip Watson did on O'Leary: "Through a series of audacious business moves and a decidedly gunslinging approach to his opponents, Michael O'Leary made Ryanair the most profitable low-cost carrier in Europe. As one business associate bluntly puts it: 'When he goes into battle he boots the shit out of anyone or anything that gets in his way.'"
And to give you an idea of O'Leary's view of business: "When you look at the number of stupid people who have succeeded in business, you clearly don't have to be very bright. Business is all about getting your sales up and your costs down, the bit in the middle is profit."
O'Leary took a tiny airline from almost bankruptcy into what is now the third most valuable airline in the world. He is without doubt one of the most unconventional, uncompromising, and yet — I think in a very roundabout way — one of the most endearing and self-aware business people in the world, and he makes for a cracking story. Enjoy.
Michael O'Leary was born in 1961 and grew up in Mullingar, a town in the midlands of Ireland. Second of six kids. His father owned a textile business — they were upper-middle class.
O'Leary went to Clongowes Wood College, a prestigious Jesuit boarding school in Kildare — kind of like the Eton of Ireland.
O'Leary said that as a teenager he was "an obnoxious little bollocks" — some people will say that he still is.
He goes to Trinity College Dublin, studies Business and Economics, and graduates in 1983. The job marketplace back then in Ireland was not very promising — the country was in bad shape. Unemployment reached 17% by the mid-eighties.
The government was borrowing heavily, so there was a crushing national debt and high taxes to pay it off. In the words of our Taoiseach — the Irish equivalent of Prime Minister — Charlie Haughey, back then, from a now infamous TV address, he told the Irish nation that they were "living way beyond our means" and needed to "tighten their belts." And this from a guy who at that time was buying his shirts from a Parisian tailor, and whose lavish lifestyle was being funded by secret payments from business people. Ireland was often referred to as the sick man of Europe — so in fairness, regardless of what the naysayers might think, the country has come a very long way over the last 40 years.
And while tens of thousands of young people were emigrating, O'Leary stays put. He gets a job at a large accountancy firm that's later bought by KPMG, as a trainee tax consultant. O'Leary's boss was handling the tax affairs of one Tony Ryan — and we can't talk about Michael O'Leary and Ryanair without doing a bit of a dive into Tony Ryan.
Ryan had worked at Aer Lingus, the national airline, but left in 1975 to found Guinness Peat Aviation — GPA. Ryan, through GPA, is credited with "inventing" the modern aircraft leasing industry, because he pioneered complex financial structures which allowed developing countries — which wouldn't have had the money to buy loads of new planes and train up staff — to launch national airlines overnight.
GPA became a multi-billion pound company with profits in the hundreds of millions.
So by the mid-eighties, Ryan was one of the most successful and wealthiest people in Ireland. Around this time, the Irish government was also slowly starting to pull away from the idea that Aer Lingus, the national carrier, should be protected from competition — mainly because the Dublin to London route was one of the busiest in the world, but because it was essentially a duopoly between Aer Lingus and British Airways, the fares were so expensive that most Irish people back then would have to take a gruelling bus journey over on the ferry to get to London. My friends and I took the Slattery's bus in 1989 to work on the sites in London for the summer when we were 16.
So Ryan officially launched Ryanair in July 1985. One route, one small plane — Waterford, a small city on the east coast of Ireland, to London Gatwick. Five thousand passengers in the first year. It's tiny. But the following year it launched Dublin to London Luton, offering a return fare of £95 against the £209 being charged by Aer Lingus and British Airways. It then added routes to Amsterdam and Brussels, but the costs were mounting. Ryanair was losing millions every year.
So back to O'Leary. He's working with his boss on Tony Ryan's taxes, and he impresses Ryan — because O'Leary is very smart and very direct.
But he also wants to be his own boss, and so after just two years with the accountancy firm, he leaves, borrows £25,000 and buys a corner shop in south-west Dublin.
He opens at seven in the morning and closes at eleven at night. He even opens the shop on Christmas Day — which no shop did in Ireland back then, and very few even do now — marks up prices on essentials. Not just essentials like bread and milk, but also higher-priced items like batteries for all of those toys that need them.
Business is booming and he opens up a second shop, and he's also dabbling in property. And this is when Ryan reaches out to O'Leary and asks him to take a look at Ryanair. Which O'Leary does, and in his own words: "I strongly encouraged Tony to close it down." Ryan refuses. Instead he asks O'Leary to fix it, offering him the job of deputy CEO. O'Leary is very reluctant — he's happy being his own boss — but he says he'll join on the following condition: he would take home 25% of any profits above £2 million. Ryan agrees. This is 1988.
By 1990, Ryanair's accumulated losses had hit twenty million pounds, and Ryan had to reinvest another twenty million of his own money just to keep the company from going under.
O'Leary takes control of the finances, and he cuts everything. No personal calls on company phones. He stops ordering pens entirely — staff are told to "borrow" them from hotels or banks if they need one. The same applies to paper. No fresh sheets for notes or drafts. Everything is reused — backs of old documents, misprints, scrap paper. Tea, coffee, biscuits — all gone. Lights get switched off if he thinks there's enough daylight. Heating is kept deliberately low. External cleaners are removed, and staff are expected to clean their own areas and empty their own bins — including senior managers.
Now, the important point is this: none of this is really about saving money in a meaningful way.
What O'Leary is doing here is instilling a mindset where every pound matters. Where there's no room for waste or entitlement. And just as importantly, he's flushing out anyone who doesn't fit that culture — people who expect aviation to be a cushy corporate job.
He realises that the whole business model also needs to change, and so he looks to an airline that has been consistently profitable — the first real rebel airline — Southwest in the USA, built by Herb Kelleher, a guy I'm definitely going to cover.
O'Leary flies over to Texas to meet with Kelleher. He watches a Southwest crew turn a plane around in twenty-five minutes — unheard of at any other airline. Then he has dinner with Kelleher. And to quote O'Leary: "I don't remember anything about the dinner because Herb drank me under the table." But he leaves Texas with a blueprint. The same plane model across the entire fleet. Secondary airports with lower landing fees. No frills whatsoever.
He came back and told Tony Ryan they had to stop being "nice" and start being "cheap." And while O'Leary wasn't the actual CEO, he was Ryan's inside man, and so with Ryan's approval he had the authority to make changes.
Free in-flight drinks and meals — gone. Customers now have to pay for them, and Ryanair put premium prices on them. Not only do they save a million pounds a year, but they also have a new revenue stream.
Cabin crew numbers on board drop from six to three, and those same crew are now expected to clean the aircraft themselves during turnarounds. The target is twenty-five minutes on the ground, maximum.
O'Leary also occasionally works a few hours as a baggage handler himself. It's a gimmick, but it's a deliberate one. The message is that no job is beneath the leadership — and crucially, it also gets lots of free publicity. Free publicity through stunts and controversial comments became a key ingredient of Ryanair's success.
So we're into 1991 — the Gulf War — a disaster for the aviation sector. But O'Leary, like a lot of great entrepreneurs, nearly always manages to turn crisis into opportunity. And I'm reminded of a quote from Andy Grove of Intel: "Bad companies are destroyed by crisis. Good companies survive them. Great companies are improved by them."
O'Leary uses the Gulf War crisis to cut the route network from nineteen destinations down to six, focusing entirely on the high-density Ireland-to-UK corridors where demand is proven. And together with the cost savings, he's turning the company around. At the end of 1991, Ryanair posts its first ever annual profit — two hundred and ninety-three thousand pounds.
And for Tony Ryan, this provides a lifeline — because in 1992 his main business, GPA, crashes spectacularly. The Gulf War had resulted in a massive downturn. GPA had huge debts. They go for an IPO but have to pull it at the last minute because there isn't enough demand, and Ryan's empire and much of his wealth is gone. Ryanair is the only valuable asset he has left.
With his Southwest blueprint, O'Leary starts approaching secondary airports — places like Beauvais outside Paris, Charleroi outside Brussels — airports that are desperate for traffic and willing to do deals on landing fees.
He also convinces the Ryan family to start moving the fleet to one make of aircraft only — the Boeing 737 — which meant one training programme, one maintenance operation.
Not only that, but he also ensures that Ryanair became an early adopter of slimline seats. And as someone who is six foot two, it's one of the many reasons why I don't like flying Ryanair. The seats on Ryanair planes have less padding, less legroom, no seat pockets and don't recline — so while its main competitor Aer Lingus carried 150 passengers on a 737, Ryanair could carry 189.
And then in late 1993, the Ryanair CEO resigns, and Tony Ryan obviously wants O'Leary to take over — but he wants to scrap the 25% profit deal he had agreed with O'Leary a few years previously. He knows that if O'Leary keeps growing the company, that 25% will turn into a huge sum, and he knows they'd never be able to float the company with that condition in place.
O'Leary, tough as nails and someone who understands his worth, refused to back down and tendered his resignation.
Tony Ryan blinked first. He knew how good O'Leary was and couldn't afford to let him leave, so they reached a compromise. O'Leary was to receive £17 million over the next three years, and he was also able to buy a 17.9% stake in the company for just £1 million. Crucially, O'Leary also had total operational control, with Ryan retreating to a more chairman-style role.
So as we can see, O'Leary negotiates hard and he nearly always comes out on top.
Because of all of these changes implemented by O'Leary, Ryanair's costs were up to 50% lower than other airlines. So as we move into the mid-nineties, people who had never flown before were now flocking to Ryanair. You had Irish immigrants in the UK who could now afford to fly home for birthdays, funerals and weddings. You had the Celtic Tiger — Ireland was booming — and people were now flying to Premier League games, or going to European cities for hen and stag parties, couples going for weekend breaks. Ryanair facilitated all of this. And a lot of people in Ireland and the UK who might not necessarily like Ryanair because of its poor customer service are nevertheless very grateful for the changes that happened as a result of the positive disruption it created.
So we're now in 1996. Ryanair has 16 routes, is carrying 3 million passengers, has 12 planes, had profits of £25 million, and is looking to go public. But they need help. You see, Ryanair had a credibility problem.
Tony Ryan was still associated in many investors' minds with the collapse of GPA — and Michael O'Leary, while clearly brilliant, was viewed by plenty of people as loud, abrasive, totally unconventional. Here are some quotes from him: "Germans will crawl bollock-naked over broken glass to get low fares." And here's another one: "The airline industry is full of bullshitters, liars and drunks. We excel at all three in Ireland." So it's fair to say he's not polished — he's not your typical public company CEO material.
And so enter stage left David Bonderman, the American private equity titan, co-founder of TPG — Texas Pacific Group. Another fascinating character. By the mid-nineties he'd already built a reputation in aviation by helping rescue Continental Airlines from near collapse.
So in 1996, Bonderman and TPG provided £24 million in loans to Ryanair and £1 million in equity, with Bonderman becoming chairman, and they took a 20% stake. This gave Ryanair a huge amount of credibility ahead of their IPO.
In May 1997, Ryanair goes public with an initial market cap of three hundred million euros. O'Leary now has a 14% stake in the business, the Ryan family have about 40%, and TPG has just under 15%. And even though TPG cashes out in 2001 with more than a 10x return, Bonderman remains as chairman up until 2020. He and O'Leary work really well together, and O'Leary credits Bonderman with helping build Ryanair.
Flush with capital from the flotation, O'Leary placed an order for 45 new Boeing 737s and opened up more routes to secondary airports around Europe — again, opening up air travel to tens of millions of people, which I believe had a very positive societal impact on Europe.
But while all of this is going on, there is huge tension building between O'Leary and Tony Ryan.
Tony Ryan had always projected an image of sophistication. He lived in a palatial estate, collected fine art, and socialised with the global elite. For Ryan, air travel was seen as glamorous. But O'Leary didn't share that romanticised version. Here's a quote from him: "Air transport is just a glorified bus operation." And so as Ryanair's image became brasher, Ryan felt that it was not only tarnishing his name, but he also genuinely felt that the image Ryanair was cultivating would damage it in the long term.
Following its flotation in 1997, Ryan wrote to O'Leary and Bonderman, and I quote: "the company is playing Russian roulette with our cavalier attitude with our image. Currently we are treating our customers poorly."
Ryanair has always had poor customer service. The thing is, a lot of people say that Ryanair copied Southwest — they did in many ways. But the one thing that Southwest has always done is deliver excellent, almost legendary customer service. Ryanair is the total opposite, and it's very deliberate.
Because O'Leary viewed good customer service as a cost. They charge high fees for "mistakes" — like not printing your boarding pass, which used to cost €60, or huge fees for oversized bags. And these aren't just revenue sources; they are "behavioural penalties" to make the airline run faster.
This lack of customer service became a badge of honour — a signal that the passenger wasn't paying for fluff.
So despite Tony Ryan's protestations, there was little he could do because the business was going gangbusters. Tony Ryan died in 2007, and over the years his family sold most of their stake in Ryanair.
In January 2000, Ryanair launched its website. It was built on a shoestring budget by two teenagers for about €20,000, after O'Leary rejected million-pound quotes from big agencies.
Within a year, 75% of all bookings were online. This allowed O'Leary to stop using travel agents, saving 10% in commissions. "Screw the travel agents. Take the fuckers out and shoot them. What have they done for passengers over the years?"
By the summer of 2001, Ryanair was a cash-rich, profit of €110 million, carrying 7.4 million passengers — a digital-first, ultra-efficient machine, and was perfectly positioned to survive a global shock.
And that global shock happened on 9/11. The aviation industry essentially freezes. The big airlines are looking for government bailouts and are cancelling or deferring aircraft orders.
O'Leary does the opposite. He'd been in negotiations with Boeing for about a year, and when 9/11 happened he dramatically stops the negotiations and starts talking to Airbus. Then he places ads in aviation magazines in a wild west style — a big "Wanted" slogan — saying that Ryanair is looking for second-hand planes. That generates hundreds of offers.
He uses all of this to put the squeeze on Boeing, and finally in January 2002 he signs a multi-billion dollar deal for a hundred new 737s and options for fifty more. Industry experts believe O'Leary got as much as a 50% discount — the largest ever discount in Boeing's history.
And here's an excerpt from Philip Watson again: "MICHAEL O'LEARY is standing on the roof terrace of a London office block, kissing a middle-aged businessman fulsomely on the cheek. Wearing his trademark rugby shirt, jeans and black suede shoes, O'Leary is play-acting for the assembled photographers by getting affectionate with Toby Bright, the besuited and somewhat embarrassed-looking Vice President of US aircraft giant Boeing."
Of course by this stage you have plenty of other airlines attempting to copy the Ryanair model — the likes of Go and EasyJet — but their average fare is £52, whereas Ryanair's is just £33.
And this is the thing. While it might look easy to just copy what Ryanair does, you can't copy a person. Ryanair is Michael O'Leary. You can't copy his unpredictability and his innate sense of what to do. But what you also need to remember is that while O'Leary is controversial, bombastic and unconventional, he is also totally conventional and precise and brilliant when it comes to having the fundamentals of the business absolutely right. Because Ryanair is a fantastically run business — and this is why he is able to take advantage of opportunities, as happens in the next crisis: the 2008 financial crash. Again, the aviation sector is hit hard.
But because Ryanair is so well run, it has a nest egg of $2 billion, and O'Leary uses it to pile more pressure on his suffering competitors. He puts 5 million seats on sale for €5 each to maintain an 85% load factor and crushes weaker rivals. Three low-cost European airlines went bankrupt and Ryanair hoovered up their routes and passengers.
Around this time he's featured on a Bloomberg documentary. When asked about the secret to his success he says: "Well, it's generally a byproduct of about 99% perspiration and 1% inspiration, but in my case probably less inspiration and more perspiration."
He bats away any environmental concerns by pointing out that Ryanair is the greenest airline because it has the newest fleet — their planes produce 50% fewer emissions than their predecessors, burn 45% less fuel and make 45% less noise.
Ryanair continues to grow over the next few years. But it hasn't all been plain sailing. In September 2013, the airline issues a profit warning, then a second one in November. Ryanair is carrying eighty-one million passengers a year, but it's consistently ranked the most hated brand in the UK. Competitors like EasyJet are quietly improving their product.
So O'Leary does something he has never done up until now. He admits the image has become a problem. He tells shareholders he'll be more cuddly. "One of the weaknesses of the company now is it is a bit cheap and cheerful and overly nasty, and that reflects my personality."
He launches what becomes known as the Always Getting Better programme — allocated seating, a redesigned website, reduced charges for minor infractions.
The pivot works faster than most people expected. By the end of 2015, traffic has grown eleven percent and net profit has rebounded to eight hundred and sixty-seven million euros. The following year, 2016, Ryanair became the first airline to carry over a hundred million international passengers in a single year.
But if that sounds like Ryanair has vastly improved its customer service, well, don't be fooled — they're still a terrible airline to fly with.
The growth has just continued, mainly because they are cheaper and have more routes than their rivals. Yes, there have been plenty of other bumps and battles. In 2020, of course, there's Covid, and Ryanair posts a loss of eight hundred and fifteen million euros.
But by 2023 it's thriving, and by 2025 Ryanair becomes the first European airline to carry 200 million passengers in a single year, with revenue of just under €14 billion and profits of €1.6 billion. It's now the third largest airline in the world in terms of passenger numbers and also the third largest in terms of market cap.
And throughout all of this, O'Leary continues to fight with national and European politicians, regularly taking them to court and berating them on the airwaves.
This is what he had to say about Boris Johnson, the former UK Prime Minister who pushed the whole Brexit campaign: "He's a liar and a buffoon... Brexit was a disaster and anybody who tells you otherwise is either an idiot or a politician — and in his case, he's both."
On Donald Trump he said: "I don't have any faith or trust in Trump, who has proven himself to be again and again a liar."
He then gets into a very public spat with Elon Musk, when O'Leary publicly rejected the idea of installing Musk's Starlink satellite Wi-Fi on Ryanair's fleet for cost reasons. On X, Musk calls O'Leary an idiot and also a twat. O'Leary responds with: "All I would say to Elon Musk is he would have to join the back of a very, very, very, very long queue of people who already think I'm a t***, including my teenage children."
And then O'Leary launches a huge advertising campaign depicting both himself and Musk as the idiots. He calls it the "Big Idiot" Seat Sale, offering 100,000 seats for €16.99, and O'Leary went on to thank Musk for the huge amount of free PR Ryanair generated from it.
But again — don't be fooled by the bombast, the very public mocking of politicians and anyone who is against him. Everything O'Leary does has a single focus: to grow Ryanair. In recent interviews, O'Leary says that he will remain in charge up until 2035, by which time he'll be 73. I think his aim is for Ryanair to become the number one most valuable airline in the world, and I think he'll get there.
In terms of personality, sure, he'll say things that I don't always agree with — but for most Irish people, O'Leary has been in our lives for the last 30 years, and despite the abrasiveness and everything else that comes with him, you know that a lot of it is tongue in cheek, and all of it is geared towards building Ryanair. And underneath it all, you know that he's just a very smart, driven person. He's not a bad guy — he's just very direct. And that's what makes for such a great business story.
And that brings us to listeners' emails, and this one comes from Julian, who'd love to hear the story of Jack Ma, founder of Alibaba — and that's a great suggestion, Julian. Might do a two-parter on him. Thanks so much for listening, Julian, and for the suggestion.
And remember, if you have any comments, any corrections, or any story you'd like us to cover, email us at info@gbspod.com. All the best, folks.