Michael O’Leary is a force of nature. The driving force behind Europe’s largest airline, he has completely transformed the fortunes of the business since he took over as CEO.
When he joined the company, Ryanair was a tiny, loss-making business that was facing bankruptcy. Today it’s the fifth-largest airline in the world by passenger numbers and has wildly ambitious future plans.
He recently shared his six lessons for business and life.
#1 Find out who is succeeding in your industry and steal their formula.
O’Leary was inspired by what Southwest Airlines, led by legendary entrepreneur Herb Kelleher, was doing in the US.
Southwest is the largest domestic airline in the US with a 23% market share. They transport over 150 million passengers every year and have been among the world’s most profitable airlines for the past 30 years.
Recognising they were doing something special, he travelled to their base at Dallas Love Field and spent time learning everything he could.
O’Leary wanted to replicate this in Europe and so he focussed on three key ideas learned at Southwest.
1. Use only one aircraft type to maximise efficiency and reliability.
2. Use secondary airports – out-of-town locations which are cheaper to land at.
3. Turn the plane around in 25 minutes – this ensures two extra flights a day
He did away with business class, betting that travellers didn’t need a glass of champagne or a movie for a short-haul flight.
Looking at what had already happened in the US, he understood that short-haul travel would be commoditised and so the only areas to focus on were punctuality and keeping fares as low as possible.
#2 Maintain a strong balance sheet.
He knew the airline industry is capital-intensive & cyclical. So, he stockpiled cash in the good years and was able to negotiate amazing deals with Boeing during times of crisis, when no one else was buying aircraft.
He attributes this strategy to his heritage in Irish farming where he explains, you have to sell your cattle and crops in the Summer and then hunker down for winter. Same in business.
#3 Keep the team lean and focused.
Ryanair transports 168 million passengers a year and employs 17,000 people. By contrast, Lufthansa carries 130 million passengers and employs 130,000 people, with the attendant extra cost and bureaucracy..
There are only ten people in the management team at Ryanair and only three levels between the CEO and the ground crew handling the bags.
O’Leary tries to retain his humility and is often seen helping pout at the check in desk at Dublin airport!
#4 Avoid expensive advertising.
O’Leary took a leaf out of Richard Branson’s playbook early on and looked for ways of getting free PR and publicity. They had no money to pay for expensive marketing campaigns then and little appetite for it now.
This strategy occasionally backfired – such as the time he said that they’d be charging passengers £1 to use the toilet!
#5 Entrepreneurs never retire
At 61, people sometimes ask him when he’s going to retire. His reply? “It’s better to wear out than rust out.” It’s better to remain active than to be idle.
He relishes the daily challenges and always wants to win. He believes that challenges exist to motivate us and give us a reason to get out of bed.
He no longer has any personal economic worries, but without the work, the competition, the challenge, he’d be bored out of his mind.
#6 Ambition and Optimism
His advice to entrepreneurs is to be an optimist and don’t listen to naysayers
Work hard, be productive and challenge yourself. Be ambitious for yourself, your family and your future.
“Ambition drives humankind – ambition changes the world.”
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