‘We all have to cut our cloth’ – O’Leary

RYANAIR boss Michael O’Leary warned yesterday that handing out ‘blank cheques’ to pay for spiralling energy bills will only fuel inflation.

Instead the solution to the costs-crisis was to ‘cut our cloth’, he said after yesterday’s company AGM.

The 61-year-old multi-millionaire said: ‘The more you try to insulate consumers by giving them blank cheques to pay for it the more you drive inflation forward.

‘We’re all going to have to cut our cloth, interest rates are going to rise and I think you’ll see consumers adjust pretty quickly to these new realities.

‘I’m old enough now to remember oil at $130 a barrel, I remember interest rates when they were 20% and inflation when it was 20%.

‘So the idea that the end of the world is nigh is a little bit overblown. We need to tighten our belt and there’s no other way out of this. And the Government giving €200 energy subsidies to rich people like me is not the way out of this. It is for Government to cut spending, not waste it on rich people like me.’

Inflation is currently at a near 40-year high of 8.7%, according to the latest official figures but dipped slightly from last month from 9.1% in July. However, Taoiseach Micheál Martin defended the handouts and said: ‘People need help now.’ While he agreed with him in one sense, the Taoiseach argued that energy credits are the most efficient way to help people with rising costs.

‘I do understand Michael O’Leary’s point,’ he said. ‘However, in terms of effectively and efficiently moving to intervene, there are methods that lend themselves to that. Otherwise, you’re getting into huge bureaucratic sorts of operations, which only serve to delay the allocation of badlyneeded funding.

‘That’s the balance that we have to strike.’

While the Government will be able to provide ‘significant interventions’, it will be targeted through social welfare measures. The budget airline is taking advantage of a very strong fuel hedging position, having bought most of its fuel needs up to next April at around $64 a barrel, well below the price of around $94 a barrel yesterday.

‘And we are able to pass on those savings to our customers in the form of lower fares. That’s why we are growing strongly.

‘We’ve had a very strong summer. If there are no disruptions with Covid or with Ukraine this winter we think we are on track to carry around 166million passengers this year,’ he said.

But Mr O’Leary also said that while people may fly less over the coming months as a result of the rising cost of living and economic downturn, they would fly less with more expensive airlines.

‘He predicted rivals that have not hedged fuel to the same extent would be facing much higher costs and probably have to raise fares.

For next summer, the airline has hedged about 50% of fuel at around $92, so it is also facing higher bills next year.

But that does not mean fares will be considerably higher by next summer though. ‘We would need to see a small increase in our fares to cover that higher oil bill next year,’ he said.

Depending on the war in Ukraine, oil could fall in price by next summer.