Not often a leading businessman comes into the Stock Exchange asking for a recession - but Ryanair's Michael O'Leary has the unfailing ability to profit from the silver lining. Chased up a tree by a lion, he'd be admiring the scenery –and it has to be said that there have been few cases of eyestrain developing by looking on the bright side – but welcoming a recession?

'We've had five or six good years. What we need now is a bit of belt tightening – it would be good for the economy and also good for the price of oil. The government can't keep bailing out the economy with lower interest rates.'

What he's betting on is that his business is effectively recession proof. There's strong evidence that after the big shocks to confidence over the past decade – 9/11 and the two Gulf Wars – that the consumer still wanted to fly, still wanted to holiday and headed for the cheapest fares, O'Leary's speciality. He hopes that the coming recession, as he calls it, will do the same. He also hopes that a slowdown in demand will have the effect of lowering the oil price – which is doing such damage to the airline business.

Well, we shall see. O'Leary warned that higher fuel costs and a decline in the sterling could cut into profit by as much as 50% this year – and that's after he announced the first quarterly decline in more than a year. If those figures reflect the true flying conditions then the more traditional airlines are going to find 2008 very difficult, not to mention the airport operators. As for you and me – prepare for lower fares. I'd go long on sun cream if I were you.

Posted by Michael Wilson, Business Editor

Comments

[colin 5 Feb 2008 08:49:58]

Ryanair is the best company for....... communication!
Michael O'Leray did the same kind of statement in June 2007; the shares of Ryanair dropped, and all low-cost carriers in Europe were affected by this declaration.
Then Ryanair few months later declared that all was finaly fine!
With these kinds of declarations, Ryanair uses journalists and media for its own goals: to weaken its competitors (ie: Vueling and SkyEurope are in bad shape...).
Some say that Ryanair buys its own shares when their price is very low following its declaration... I couldn't check on that...

[Khalid 5 Feb 2008 01:18:09]

Sir
The airline industry unlike others benefits from more tax exemptions than [Quincy Jones] can free when on duty.
Taking aviation fuel for example, the cheapest off all, however, such is consumer choice surrounding travel that the days of the budget airline appears to have peaked as nowadays service reliability is top of many an agenda whereas cost in itself plays a pivotal role.
To call a recession just for the sake of one entrepreneur itself will not benefit any economoy, however, pertinent to survival is the many a hidden charge applied as the baggage more often goes one way and the allowance goes tuther.
Consumers will travel the world and pay the right price, if only the airline industry can say [Give Me the Night] and concentrate on their core business as the tourists will travel miles to accomodate them within their itinerary. So, what factor shall I apply for the delicate skin that I have?