Airline Leader Interview - Ryanair DAC, CEO, Eddie Wilson

Transcript

Andrew Charlton:Yesterday people complained that I was in the audience and they could only see my back. Well, you're going to pay the price for that now because now you're going to see my face. It's an enormous pleasure to introduce Eddie Wilson, who is the human face of Ryanair. He's a man who can run whole sentences together without swearing. Although we can swear as well, I can assure you of that. But Ryanair should be considered Europe's national carrier. It most certainly should be considered Spain's national carrier. It's Italy's national carrier. It's Britain's national carrier as well.

Eddie Wilson:Just about, yeah.

Andrew Charlton:Just about. We heard yesterday, Eddie, a really interesting presentation that said that even though traffic in Europe is at about, uh, John, help me out, 95, 96% of 2019, low-cost carriers are about 116%. Yeah. And it's probably right to say of the low-cost carriers, Ryanair is carrying the lion's share of that. It seems as if to me you won COVID.

Eddie Wilson:Yeah.

Andrew Charlton:Does that— is that a fair thing to say?

Eddie Wilson:Yeah, we've recovered to, um, just touching 130% against pre-COVID. We had an aircraft order, and most importantly, we were ready to go straight after COVID because we never left the office. We were always planning to come back. We couldn't sit around and wait for governments to dole out money to us, and there was no one coming to help us. So we were always focused from day one, and I think we got out of the traps first and we took all the opportunities. And that has been hugely satisfying to do that.

Andrew Charlton:I could imagine. But it wasn't just the folks sitting in the office. You said, you know, we never left the office, we kept coming to work. But it was also your pilots, your crew, your cabin crew, those sorts of people. How did you manage to do that when every other airline seems to have scrambled and been unable to find anybody?

Eddie Wilson:You know, the human race does things best when everybody's in the same room.

Andrew Charlton:Right.

Eddie Wilson:And we were all in the same room. And it's when I talk about we never left the office, I talk about the people who planned and coordinated. But we kept the pilots, cabin crew, engineers, we kept them all current with their licensing.

Andrew Charlton:Right.

Eddie Wilson:And that meant that we were never going to— that had its challenges as well. You know, we had birds nesting in the aircraft, we had pitot tubes blocked up when you would never have them, those type of things. But we had to manage all that, but we were ready to go. We had armies of Pilots and cabin crew being positioned to simulator centres around Europe, and we were almost on a war footing ready to go. And it looks visionary now. It does. But we just had— we had no plan B. We were just waiting to come back.

Andrew Charlton:Surely plan B is just push the aircraft up against the fence, isn't it?

Eddie Wilson:Except I think we got an insight during the rostering crisis back in 2017 which was a tightening in the roster as to how potentially to recover an airline. And as I've said before, like, powering down an airline is like powering down a nuclear power station. It's just not a good idea, you know. And, uh, and I think the, uh, the, the, the, the lack of, um, the connection with the Ryanair management and the front line is very, very narrow. In other organizations, with respect, I'd say many people in other airlines in my position don't know who runs the training department, don't know who runs rostering, don't know who runs maintenance on a day-to-day basis. And when you have those people there in the office, we knew all the problems. But if you're on a Zoom call where everybody just goes, bye, everything's fine, and you're actually talking to the wrong person because the person who's running the roster isn't even on the Zoom call.

Andrew Charlton:Right.

Eddie Wilson:So, uh, so people were good at managing airlines that were functioning. I think we're closer to the operation because our commercial success is driven by operational excellence, and we knew we had to get that right.

Andrew Charlton:Right. So other airlines really did pull right back, felt that the only thing they could do was conserve their cash. You, you were prepared to take that hit?

Eddie Wilson:Yeah, because— and I'm amazed, I think, that when the accountants take over and think that you can let people go and then it's a surprise that they're not there when you want them back.

Andrew Charlton:Right.

Eddie Wilson:And we— like, it wasn't Disneyland for us either, but at least we made a commitment and people in a time of crisis just want to know, are you with me and am I coming? You need to have simple messages. Now, some people in some countries, our pilots and cabin crew, didn't do as well under some of the government support systems, but other government support systems worked well and we were able to top up as well. But at least people knew, I've got a job, I'm coming back, and they're on my side for now, and they had certainty. And then when you've got an organization that just takes an advantage and lets people go, they think they can stack it up like pieces of Jenga when they're real people.

Andrew Charlton:Right. Did that behaviour— I mean, historically, it's probably fair to say that you have a contentious relationship with some of your staff. There have been, you know, complaints and issues over the years, but did— do you think that really worked to recover that sort of stuff?

Eddie Wilson:I don't really accept that, right? Okay. Because where a lot of that commentary came from was when we were grabbing market share and the incumbent carriers had to come up with, you know, they're doing something different. They never said we were creating all these jobs. Yeah, of course we're doing something different. If you work in a low-cost carrier, you work in Ryanair, you know, the trade-off that you get is the— say, for example, for a pilot, is you do fly more hours which you get more predictability and you're well paid. But people are never going to thank you for working more hours because everybody in this room wants to be paid more and have more holidays.

Andrew Charlton:Yeah, can I also—

Eddie Wilson:we can all have a show of hands here. Like, I mean, but we built a different model, and I think that narrative was constructed from, in particular, unions at that time that wanted to impose what they had in their companies because they didn't want that change coming to them. So most of it was driven by trying to impose that demarcation. And then ultimately, the whole industry changed. And I think if you talk to the 6,000 pilots that work with Ryanair now, that they would have never had a job in their national carriers.

Andrew Charlton:Right.

Eddie Wilson:Because they wouldn't have existed. And all the other low-cost carriers, You know, you've got EasyJet, Wizz, everybody else who created all those jobs and utterly transformed the industry. So I don't think— we're not in this industry to be loved by our people. Most people pack their bags at the end of their shift and go home and make great decisions on who they marry, where they get their mortgages, you know, where they eat. But you have this idea that companies can grab their arms around people and, you know, and you're part of some cult. Come on, you know, like give them predictability and pay them well.

Andrew Charlton:Okay. Another thing you mentioned that I want to come back to, you said a lot of— yes, you took advantage of those sorts of employment schemes, the furlough schemes, what have you, what have you, that were out there. But Ryanair very, very distinctly didn't receive a lot of government bailout money.

Eddie Wilson:Yeah.

Andrew Charlton:Indeed, I think it's right to say you received none. Other than the standard fertilizer.

Eddie Wilson:Yeah, got nothing. As a matter of fact, they worked— you know, we're supposed to be in the European Union. You know, the French came out with a scheme that said that you had to have an AOC that was in France. Then they actually messed it up so much that when they gave state aid, they gave it to KLM and Air France at the same time, as if they were separate airlines, until somebody pointed out that they'd actually merged about 10 years before that.

Andrew Charlton:And that somebody was Ryanair, as a matter of fact.

Eddie Wilson:But even with employment payments, we had huge difficulty in Germany in securing payments from local offices, which we then had to pay, and ultimately we were successful in recovering. But I think the general story for Ryanair against official Europe is we are misunderstood centrally, but we are loved in the regions. And I think that's gradually moving centrally because when we were in Spain and we were—

Andrew Charlton:When you were in Spain.

Eddie Wilson:Yeah, when we were in Spain and we were recovering in Spain and the Spanish government were trying to get tourism kickstarted, 14% of GDP in Spain is driven by tourism, and they went around and told the regions, what do you want? We want Ryanair back. We want Ryanair back. We want Ryanair back. You know, people sort of say, well, we're Ryanair. Well, they're actually the number one airline in Spain by passenger numbers. And I think we really kickstarted tourism and connectivity post-COVID in a lot of countries. And Spain is one of the real success stories for us on that.

Andrew Charlton:That's— I mean, your observation that you're hated centrally and loved regionally.

Eddie Wilson:I didn't say hated, misunderstood.

Andrew Charlton:Okay, right. I thought I heard the word hated. But nevertheless, that imbalance between where you actually deliver results and the sort of national image of countries, if you like, which, which of course what that shows, I guess, is the lobbying power of your Lufthansas, of your Air Frances, and your Iberias, and what have you. Do you think that's— as, as, as your economic impact, as your value is becoming more evident to everyone, That's changing. Do you think that it's going to keep on changing?

Eddie Wilson:Yeah, I think so, because the legacies in terms of short-haul travel in Europe is less lucrative for them from a fares perspective, even though fares are tracking up. But the key thing is they've no new capacity. Okay. And, you know, what's going to happen in aviation here over the next 5 to 10 years is that Airbus are full. And if I wanted to start up an airline tomorrow and had the funding to do it, You can't get an aircraft out of Airbus post, you know, 2032. Boeing are full until 2030, maybe beyond that. And it's not been back to 95% this year. We reckon that there's about a 25% shortfall in capacity given over what would have grown during— had we not had COVID. And I think airfares are going to track, um, are going to track upwards. And there are some real aberrations in those markets. Germany, for example, hasn't recovered. It's recovered to 75%. The national champion has got 2 hubs in Frankfurt and in Munich. They've about 100 less aircraft. The regional airports— and they're not regional airports in the way we talk about Ryanair regional airports, we're talking about the capital city of the largest economy in Europe— traffic is going backwards on an airport that can carry 50 million people. And there's nobody coming to fill that capacity. So Germany is looking forward at less connectivity and skyrocketing airfares, and the smart airports and regions are looking out to those airlines that have got capacity, and we're the only ones that can move the dial. So if there's any airports in this room where we've given you a growth proposal, I would write back to us and accept that right now, because we've got 2 more years of growth— this year In summer '24, summer '25, the 8,200 order is over, and then we've got 18 months before we start taking the MAX 10.

Andrew Charlton:Right.

Eddie Wilson:We—

Andrew Charlton:I wasn't quite sure how you said very early on there, you know, what happens when accountants take over. And I thought that's the perfect segue to talk about Boeing. Yeah, because I think that's what happened at Boeing.

Eddie Wilson:It's, it's difficult to know because we're not there as But when we do visit there, and we've got a lot of engineers out there, because I think we've got something to add there in terms of quality. But I think their problem is really a post-COVID problem in terms of getting a workforce back in and up to standard. And I think if Ryanair's got a problem, and an airline is a complicated industry, you get all the people, the decision makers and the people who are accountable in the same room. And I think unfortunately in places like Boeing, they've got the factory in Seattle, they've got the head office in Chicago, they've got defence in Virginia and you've got a lot of people working from home.

Andrew Charlton:Yeah.

Eddie Wilson:And I think you need somebody on a Monday morning in Renton in Seattle who says, how many fuselages are we short and why is that one out and who Who's going to fix it? And I think they need to get back to that.

Andrew Charlton:That is certainly— the legend is that that's what Mr. O'Leary does, isn't it? He rings up Boeing and says, how many fuselages short are you?

Eddie Wilson:But that only has so much impact. I mean, the way— we're not going to solve Boeing's problem by shouting at them, right?

Andrew Charlton:Although you've done a fair bit of that, to be fair.

Eddie Wilson:We've done a little bit. But I think what they have got to have a management team on the ground, senior level in, in, in, in Seattle, in, in, in, so that they do the simple things, which is— and when you're there, it's a very simple process. When you look at their experience, fuselage comes in and the cages with wire looms and everything that has to be clipped in looks to be very straightforward in terms of a process. And it doesn't seem to be rocket science, no pun intended, to get that moving and get the quality right because it's about quality. And then when the quality slips, the line slips. And so I think they'll get their act together. We'll have less aircraft this summer, but we will get the aircraft eventually and we'll have the last summer of growth before the MAX 10 is summer '25. So we have a gap of about 18 months before the next deliveries come.

Andrew Charlton:So we're looking at 2 summers. Yeah, this one coming anyway, and next year's summer where you will be aircraft short, for want of a better way to put it.

Eddie Wilson:I mean, we've, we've 147 MAX 8-200s out of an order of 210. We'll get somewhere in the region of We were hoping to get about 57 this year. It might be 45, it might be 40, but we'll have to watch that over the next couple of months as to how we will consolidate that capacity. We're not going to cancel any routes, but we will take capacity out and blend them. But like, it's a pain in the ass.

Andrew Charlton:Yeah, right, right. But how then do you reconcile? So here you are with limited capacity. I don't mean that in a derogatory way, but Unable to grow. But you're out there talking to regions, you're putting growth propositions to regions. You need capacity for that, don't you?

Eddie Wilson:You do, but there are regions at the moment like Germany where we're not going to grow there, um, because— and what, some regional airports. But you've got— we've still got 40, between 40 and 50 aircraft to play with this summer, right? And, you know, 30-odd aircraft next summer. So we still have additional capacity. So we're not robbing Peter to pay Paul, but what you're trying to do is to put those in. The only variable cost in our business is airports and taxes. Everything else— airplanes are the same no matter where I put them, it's on the Boeing deal. Fuel is the same because we hedge it. Pilots and cabin crew salaries are broadly the same throughout Europe, it doesn't move the dial. So that big one is airports and taxes. And you can see, like last week I was in A place in Reggio Calabria in the toe of Italy that has zero connectivity. And you would think that Ryanair was giving free flights to every man, woman, and child in Calabria, such was the outpouring of, we're going to be able to get to domestic destinations to see their children, medical appointments, and real inbound tourism. And that's what we deliver. Right.

Andrew Charlton:So do you fly to Granada?

Eddie Wilson:No, not yet. We did back in 2010. And Granada is a great city, but it has Malaga in close proximity. But we're talking to the, to the local government down here in the region about putting some extra routes in, or putting some routes in. And the great thing about Ryanair, we can do that. I mean, we could launch 5 or 6 routes from London, Dublin, Prague, Vienna, Berlin at the drop of a hat, given that we've got all the other aircraft at that end. I mean, Granada here has, um, primarily it's got, um, domestic routes. It has some— it has got connecting services from Barcelona for international flights, and Vueling I think do one or two flights out of here. But it is a little bit of a— everybody knows Granada. They may not be able to point it out on a map, but they want to go there.

Andrew Charlton:Yeah.

Eddie Wilson:And I think in time we'll do something Right.

Andrew Charlton:So I'm still sort of edging around the whole state aid point.

Eddie Wilson:Yeah.

Andrew Charlton:Because your lawyers have been on an absolute tear recently.

Eddie Wilson:Yeah.

Andrew Charlton:You've been winning case after case after case, undoing— I guess that's the right word, although it's too late by now— undoing the state aid grants that have been given. But you're more than happy to accept assistance from regional governments, regional support, airports, things like that?

Eddie Wilson:Yeah.

Andrew Charlton:How do you reconcile those two?

Eddie Wilson:Because it's transparent at a regional level, at a regional level because there's EU rules on this now, and the only reason we can make it work in somewhere like Sardinia or Puglia in Italy is because the other airlines, their cost base is so high that they can't actually— the fares that it would take to get people to travel there doesn't add up.

Andrew Charlton:Right. Even if they got the same money that you did.

Eddie Wilson:The variable cost that comes about on a tender, and that's why they don't apply for it, is they still wouldn't be able to make a return on it, whereas we can make a private investor rational decision with a region. I mean, recently in Trieste in northeastern Italy, which is a fiscally autonomous region, the government thought it was a good good idea to pay the municipal tax of €6.50 per passenger for every airline that goes into Trieste on the basis that they would more than recover that in tourist income, payroll taxes, VAT, and they pay that and we put in a based aircraft and trebled the traffic out of Trieste.

Andrew Charlton:Right.

Eddie Wilson:Because you think about €6.50, people say, oh, €6.50 isn't that much. It's £1,200 or £1,300 a flight. That's just, you know, that is about making that connections work. But other airlines won't go in there because even with that 650, they still can't get a return. And we open up those regions, it's open for everyone. But I think as well, we are highlighting cases at a European level, and so that DG COMP actually do their bloody job, right? Okay, about what's going on. And I think the next time we have a crisis, and a crisis we will have at some stage, And I don't think the Portuguese taxpayers are, for example, are going to dole out €350 million for an airline that actually isn't worth much afterwards in terms of its capitalisation, is smaller, when they could be spending that money on roads and hospitals. I think Spanish taxpayers who doled out €500 million for a private company in Air Europa— I'm sorry, Air Europa, are you here?— who are now in a merger with IAG, I don't think taxpayers are going to do that anymore. And I think by us putting out state aid, you can't allow the Lufthansas, the Air Frances to limp along. And, you know, they run those airlines for the benefit of their employees, not for the benefit of those countries. And they fix their business model. So look at the Germans. They put in €11 billion. They ended up with a smaller airline. And they, they didn't bail out any of the regional airports. And that's going to come back and bite them. And I think it was the And that's a fairly big category. That's a huge category. Now, Lufthansa will say, oh, we paid it back. Yeah, you paid it back, but you were supported and we weren't allowed in there.

Andrew Charlton:And you received none of that money anyway.

Eddie Wilson:Don't want it.

Andrew Charlton:But, I mean, we're rapidly running out of time, sadly, but the theme of this conference is airlines in transition. How do you see Europe's airline environment Before the next crisis, whenever that comes, and then hopefully— I mean, we didn't build back better this time, but how do you see it getting up into the next crisis? Status quo?

Eddie Wilson:Yeah, I mean, I think that there is a sort of a move at European level to stop or to look at consolidation again. I think consolidation is the right way to go. We support, for example, that IAG want to take over Air Europa, fine, once the remedies allow competition. But you can't pick, you can't pick your remedies, you know.

Andrew Charlton:Yeah.

Eddie Wilson:We support Lufthansa taking over ITA. It's not going to be the best deal for Italian consumers who are going to have to see an awful lot more Frankfurt and Munich than they've ever seen before. But I think consolidation has got to come. I think airfares are invariably going to track upwards because of the capacity has not kept up with demand and our inflationary pressures, not just on fuel, to a lesser extent this year, but certainly on staff behind the scenes. I think long-haul is going to be strong. I think that the major carriers are going to— are actually going to put their capacity into long-haul where they can make some decent money. And they're less interested in short haul because the margins are way for 10.

Andrew Charlton:And you're in there eating their breakfast anyway, or eating their lunch anyway. So do you see Europe effectively turning into 3 long haul groups and 3—

Eddie Wilson:I think there'll be 4 airline groups. I think you'll have Air France-KLM as one, you'll have Lufthansa, you'll have IAG, and then you'll have Ryanair. You'll always have, you know, all the other carriers will find their way in. I mean, easyJet will probably find their way in somewhere to be a natural fit there as to whether they go with IAG or whether they'd go with Air France-KLM given their footprint in France. Wizz, who knows? I mean, they're gradually going eastwards into the Middle East and, you know, a bigger footprint in Central and Eastern Europe. And Ryanair, you can see where we've got, you know, we're strong in in most markets throughout Europe. 3 largest markets: Italy, Spain, UK. Very strong in our own huge market shares, but also delivering the lowest fares. You know, brand new aircraft, great punctuality, much better frequency as well. And I think people know at a regional level Ryanair's coming to town. It's exactly the way people used to view Walmart coming to town in American In American, you know, what it meant for competitors, but what it meant for consumers.

Andrew Charlton:So, right, I mean, you, you don't see Ryanair growing by acquisition. You think Ryanair will grow by internal growth. Is that right? Did I hear that right?

Eddie Wilson:If you— because the person wants to do all the work on this, I much prefer organic growth. You know, I mean, I am— I have— no matter what airline you will buy in Europe, the legacy issues that they will have Regardless of how small they are, the pain and torture to go through that is formidable. And I think we're much better off to do things like setting up Buzz rather than buying other airlines. If the aircraft keep coming, we can just add them on, add them on vanilla-like.

Andrew Charlton:Right. Okay. So one of the most interesting things amongst the many interesting things is you're now growing into Morocco, including doing domestic Moroccan services. Is the rest of the Mediterranean in your— on your radar?

Eddie Wilson:I think that what Morocco's got above all is open skies, right? If you've got open skies, there's no complication. You have a government there that has a vision to double tourism, and they realize that Ryanair is growing and has the aircraft. We have 14-based aircraft. We're going to do about 8 million passengers, 8, 9 million passengers there this year. We're going to double it over the next 5 years.

Andrew Charlton:And this is internal Moroccan flying?

Eddie Wilson:As well. But like Morocco is a fantastic destination for Europeans. It's the same distance as the Canaries. It's a bit more exotic. There's a lot more things to do rather than just beach, Marrakech, you know, desert holidays. It also has huge VFR traffic, huge Moroccan populations who travel year-round. Belgium, Germany, all those places. And you've got a growing middle class there as well of 40 million people.

Andrew Charlton:And an open skies policy. So that excludes Tunisia, I assume. It excludes Turkey as well.

Eddie Wilson:Egypt, Libya, all these places like along the Mediterranean hub. But Morocco's got stable government and You know, there's a huge car industry down there, huge aeronautical industry down there, and we're going to continue to grow there. We employ people locally there, but fabulous place to do business.

Andrew Charlton:Interesting. But, but you don't see— until you get an open skies agreement, you're not going to expand into other—

Eddie Wilson:We're less likely to because you've got to codeshare, you've got to talk to some local travel agent or something like that.

Andrew Charlton:We've got 2 minutes left and I've still got 2 questions. One is, There is a change in the relationship between you guys and travel agents now, isn't there? I mean, you used to be bitter enemies. Now you just sort of, you know—

Eddie Wilson:I don't think we were bitter enemies. What we didn't want is, and it's really simple, and when the OTAs came in to talk to us and sign deals, most of them said, it's as simple as that, right? And we'll never really— we'll let them deal with those channels. All we want you to do— not me, All of us in Ryanair have done the hard work buying the aircraft, hiring the staff, hedging the fuel, doing the airport deals. We're not going to allow somebody to take those low fares that come out of that and then add on an unsuspecting premium on top of that. Sorry, no. If you want to come in, you can integrate at our website, you can get access to the lowest cost seats in Europe, but you've got to sell it at what we've put in there. If you want to put a fee on for that, or you want to charge the hotels more, that's fine.

Andrew Charlton:Not so bad.

Eddie Wilson:And we now have 3 channels: business, Kiwi here today, who are doing a— they do a transfer product that we're not willing to do, and they have an insurance product for interlining. And then we've got On The Beach, various love holidays. TUI, for example, now will be able to have much more reach to 300-odd destinations and can package up those holidays. And TUI are much better at organizing holidays, organizing the visits rather than running an airline. And it's much easier to do that. So we have a good relationship with them, but if they start scraping us or adding on, we'll switch them off.

Andrew Charlton:Right, as easy as that. We've 1 minute left and it's a mandatory thing that I have to do. I have to ask you about sustainability.

Eddie Wilson:Yep.

Andrew Charlton:It's in the rules. You've made a quite big commitment to SAF, is that right? As I understand it, 12.5%, something like that.

Eddie Wilson:Yeah.

Andrew Charlton:How's that tracking?

Eddie Wilson:And 10% of that we've already signed up for with mandates and MOUs with fuel companies. We've just got a CDP A rating. You know, with all the aircraft that are coming, there's 20% less fuel burn, there's 20% more seats. Like, it's about— like, airline travel is like any other type of travel. Which should be like airports need to reward those airlines that have less of a carbon footprint, that move the most passengers on each flight. Let's not do complicated things by, you know, the takeoff weight or the size of the aircraft or anything like that. Do it like how they run the railways, they run trams and buses. You put as many people on them as possible with the least amount of fuel and then try and leverage that with the fuel that you put in that is sustainable. And they're the things that we're doing. And we're number one for Sustainalytics in Europe as well. We're making the real hard investments. The problem with politicians is they want to make announcements, they want an app for something, they don't want to do the hard work. Like, we're investing €40 billion in these fuel-efficient aircraft. We want governments and airports to stand up to say, where's the SAF coming from? Where are you going to get it supplied? How are you going to lower the price? How are you going to help out the fuel companies? The fuel companies need to be involved in this. We're the customers, we'll pass it on to our passengers.

Andrew Charlton:We'll pass it on to our customers. We're out of time, ladies and gentlemen. I don't know about you, but I think we could have gone for about another hour. So please join me in thanking Eddie for that really quite insightful talk.

Eddie Wilson:Thank you.

Copyright policy: All transcripts on this site are the copyright of CAPA - Centre for Aviation. Our reproduction policy is as follows: you may quote up to 400 words of any transcript on the condition that you attribute the transcript to CAPA - Centre for Aviation and link to the original video page. All other use is prohibited. While we aim for 100% accuracy in the transcript, there may be some minor transcribing errors.