Michael O'Leary: Plane crazy

No one should really have been surprised at the audacity of the bid by the parvenu Ryanair for the Irish national carrier Aer Lingus this week. Audacious is what Ryanair's chief executive, Michael O'Leary, specialises in. After all, this is the chap who recently bought a hackney plate for his Mercedes - and had a meter installed in it to classify it as a taxi - so he could legally zip down Dublin's bus lanes and speed his progress around the city.

Indeed, O'Leary is more than audacious: he specialises in being outrageous. He outrages customers requesting refunds because their granny has fallen ill: "What part of No Refund do you not understand? You are not getting a refund so fuck off." He outraged Ryanair's millionth customer, who took him to court when told her lifetime free flights did not cover a bank holiday weekend. He outraged a man with cerebral palsy by charging him £18 for a wheelchair to the plane (and when the courts found against him he introduced a general 35p "wheelchair levy"). He even outraged his own mother - a devout Catholic - by dressing up as the Pope to announce the launch of a route from Dublin to Rome, declaring: "Habemus lowest fares."

And he doesn't just upset the small fry. He described travel agents as "fuckers" who should be taken out and shot. His rivals British Airways are "bastards"; the people at airport operator BAA are "overcharging rapists"; the European Commission is "an evil empire" whose commissioners are "morons".

Despite all of that, or perhaps because of it, Michael O'Leary has built Ryanair into one of the most profitable airlines in the world. And when its business model - fast turnaround times, and not much luggage in the hold - came under pressure after the terror alert in August caused massive airport delays, he turned his wrath on the Government too. He threatened to sue, fulminating against "farcical Keystone Kops measures which add nothing whatsoever to security", which required body-searching "terrorist suspects like five- and six-year-children travelling with their parents on holidays to Spain who are clearly potentially a great threat to the great British public".

It is all highly calculated. For O'Leary is of the opinion that "as long as it's not safety-related, there's no such thing as bad publicity". And though he frequently describes himself as "an obnoxious little bollocks", "a jumped-up Paddy" and "a gobshite", that is just part of his marketing strategy.

Michael O'Leary comes from a wealthy farming family and received a public school education at the top Jesuit boarding school Clongowes Wood College, in County Kildare, where he was beaten with a leather strap by the priests and thoroughly approves of the fact. He and his fellow pupils were "obnoxious, rude teenage boys", he says, who needed to be kept in order.

The eldest of six children, he quips "you had to be competitive just to get fed", but his childhood instilled a maverick independence of spirit in him. On leaving school he went to Trinity College, Dublin, to study business, buying and selling property on the side. But he never qualified and instead joined KPMG and became an accountant. It was through his work as a tax consultant that he met Tony Ryan, who was running Guinness Peat Aviation, and whose sons had also been at Clongowes.

Ryan had made a fortune in the aircraft leasing business in the 1970s and 1980s and set up a little airline, Ryanair, to ferry people between Waterford and Gatwick airport. It was little more than a taxi service, really, for his three sons - "pipsqueak airline. really, going nowhere", as one family friend put it. The cabin crew had to be less than 5ft 2in tall to operate in the tiny cabin of the 15-seater plane. It had lost about £20m.

Ryan sent O'Leary to knock it into shape and the young fixer came back and told his boss to close it. But Tony Ryan was attached to the business and decided to put in another £20m. In 1991, O'Leary, now deputy chief executive of Ryanair, flew to Dallas to meet executives from a successful regional airline called Southwest to ask them how they did it. He came back with the basic Ryanair formula: low-cost, cheap fare, no-frills flights to "secondary" airports up to 60 miles from the real destination, where airport fees are low - or who may even be so desperate for business they pay the airline to fly there.

O'Leary returned home and set about paring the operation to the bone. Out went in-flight meals. There were to be no more free peanuts or drinks. Passengers were to pay for everything they consumed. Every cost was transformed into an opportunity - last year in-flight refreshments generated extra income of £55m, an average of £1.35 per person. Each time a passenger books a rental car or a hotel room, Ryanair earns a percentage of the sale - more than £60m during 2005.

He got rid of sick bags. He removed seat-back pockets to reduce weight and cleaning expense. Most recently he scrapped the free checked-bag allowance and began charging £2.50 a bag - a move which should save another £20m a year.

He launched in-flight DVD hire and, against his better judgement, scratch cards. "I said, 'Forget it, they're for morons.' But after about three months, nobody was playing the DVDs because everybody was scratching lottery cards. So we took the DVDs off and made more room for scratch cards. If that's what the public wants..." Next year he's planning to offer in-flight gambling in 2007, with the airline earning a tiny cut off of each bet. He thinks gambling could double Ryanair's profits over the next decade.

Currently he's offering advertisers the opportunity to repaint the exteriors of Ryanair's planes, effectively turning them into giant billboards; Hertz, Jaguar and Vodafone have purchased space on the fuselages of Ryanair's 737s.

The O'Leary revolution even extended to making Ryanair crew pay for their own training, uniforms and meals. Staff have to use their own pens. Last year they were banned from using the company's electricity to charge own mobile phones. Potential pilots have to pay £50 for the privilege of a job interview and, if they pass, a further £200 for a simulator check.

On the back of all this he cut costs - dramatically. In 1990 he cut the lowest fare Ireland-England fare to just £59 return. "For years flying has been the preserve of rich fuckers," he said with his characteristic eloquence. "Now everyone can afford to fly."

The years passed with milestones to his ruthless efficiency. In 1993 Ryanair launched its first new route for five years with daily flights from Dublin to Birmingham - in the teeth of the opposition of the Dublin government which warned the company it would "upset" Aer Lingus.

The year after O'Leary was promoted to chief executive on the back of what he called his "Wal-Mart strategy: pile it high and sell it cheap". In 1995 Ryanair overtook Aer Lingus and British Airways to become the largest passenger airline on the Dublin-London route. In 1997 he launched four new European routes including one to Frankfurt, which aroused the scepticism of the Lufthansa chairman, Jürgen Weber, and the ire of O'Leary in response: "Jürgen says Germans don't like low fares. How the fuck does he know? The Germans will crawl bollock-naked over broken glass to get them." That year Ryanair became a public company for the first time with a successful flotation on the Dublin and New York stock exchanges. All of Ryanair's employees, who had received shares, found themselves sitting on a £60m profit.

O'Leary took no prisoners. The Irish prime minister, Bertie Ahern, criticised the Ryanair boss's "tooth-and-claw capitalism" during a strike by Dublin baggage handlers in 1999. O'Leary responded by refusing to take Ahern's calls.

In 2001 the airline carried more than one million passengers in one month for the first time. In 2004, according to Google, Ryanair became the most popular airline on the web. In August 2005 it carried more passengers in Europe than British Airways on its entire worldwide network.

The average Ryanair flight at present costs £30 - and yet the airline's £200m in net earnings give it a 22 per cent net profit margin, the best in the industry. It has made Michael O'Leary, who personally owns a 5.4 per cent stake in Ryanair, worth £124m. He is one of Ireland's richest citizens, with an estimated fortune of €466m.

As a result, though he eschews expensive suits - and often goes on business trips in jeans, open-necked shirt and a slightly grubby cagoule - lives in a listed Georgian mansion, Gigginstown House near Mullingar, in County Westmeath. There he breeds horses, including the one that won this year's Cheltenham Gold Cup, and Aberdeen Angus cattle. Not that Ryanair leaves him much time for that.

Or anything else. It was not until the age of nearly 40 that he met the woman he was to marry, Anita Farrell. "I generally get on very well with women, but I used to work seven days a week and usually 16-hour days. I had no time for girlfriends. I didn't have girlfriends for 10 or 15 years." They wed in 2004 and their first child, Matthew, was born last September. He did not find a lot of time, he admits, for changing nappies.

Ask him about the future and his thoughts turn ineluctably to Ryanair. Within a decade, he predicts, all Ryanair's flights will be free, with the costs being paid through the ancilliary profits from in-flight services and the rest. Might not action to curb climate change affect all that?

Environmentalists, he says dismissively, are "half-witted loons who can't add two and two". "Our planes use a lot less fuel per mile than a one-person car. Aircraft account for 4 per cent of emissions in Europe, motor cars for 28 per cent. If you're concerned about the environment, stop driving."

A Life in Brief

BORN 1961, to a family of six in Co Westmeath, Ireland.

FAMILY Married Anita Farrell, a banker, in 2004. One son, Matthew, born 2005.

EDUCATION Clongowes Wood College; Trinity College, Dublin (did not graduate).

CAREER Tax consultant at KPMG 1984-86; Dublin property developer and financial adviser to Tony Ryan; director of Ryanair 1988-1991; deputy chief executive 1991-1993; chief operating officer 1993, chief executive, Ryanair, since 1994.

HE SAYS "I never wanted to be a pilot like those other platoons of goons who populate the air industry. An airplane is nothing more than a bus with wings on."

THEY SAY "He is almost certainly one of the most successful leaders in the industry, with a unique business model, discipline and an extraordinary level of confidence." - Sir Michael Bishop, chairman, BMI British Midland