RYANAIR, the European budget airline run by colourful Michael O’Leary, signalled a U-turn in its growth plans yesterday, saying it might stop expanding if it fails to negotiate a better deal with Boeing on new aircraft.
The carrier, which has been following an aggressive growth-plan despite the slump, is talking to the US planemaker about buying up 200 aircraft. But O’Leary said yesterday it would return cash to its investors rather than purchasing the planes if Boeing would not slash the price of the jets.
“We see no point in continuing to grow rapidly in a declining yield environment, where our main aircraft partner is unwilling to play its part in our cost reduction programme,” he said. O’Leary owns five per cent of Ryanair, and would be one of the biggest beneficiaries if the airline started paying dividends.
He said he was “optimistic but not confident” on reaching a deal with Boeing.
The chief executive was speaking as Ryanair unveiled six-month pre-tax profits of €419.4m (£376.2m), up from €105.2m in the same period last year.
O’Leary said the results were distorted by a massive slump in fuel costs over the period, adding that average fares had dropped 17 per cent.
“The outlook is grim, which is great for our business. We love recessions, we love downturns, that’s when we like to grow and order more aircraft,” he said.
The airline also warned shareholders it would cut fares over the next six months, and forecast a loss for the second half of the year.
Despite warning that Ryanair might stall its growth plans, O’Leary said he expected it to become the number one carrier in both Italy and Spain by the end of 2010. It currently has a 19 and 13 per cent market share in both countries respectively.
He also spoke out on the upcoming Copenhagen climate change conference, which kicks off next month to much fanfare.
“I would not cross the road to get to Copenhagen… it’s just a talking shop for imbeciles,” he said.