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O’Leary’s Sixty Grand Bruni Bargain

Posted on: February 11th, 2008

Michael O’Leary has had a wonderful week. He lost €30m personally; Ryanair bombed by half a billion in value; profits tanked by 27 per cent; earnings per share dropped by 24 per cent. Even better, O’Leary issued a shock profit warning: the worst was yet to come.

Best of all, the President of France defeated him in a bizarre court case.

A French court put manners on Michael. He was ordered to pony up €60,000 for poking fun at Carla Bruni, Nicolas Sarkozy’s new missus. And the court directed him to send a token €1 to the President himself. Yet Michael had a mighty week.

He turned the profit warning into a commercial triumph. He transformed the court order into a global promotion. The names of Ryanair and its maverick boss were broadcast around the world, immortalised for taking a potshot at the rather unlikely couple who now lead France.

O’Leary’s boys put a cheeky advert in Le Parisien. Above Carla’s head was a bubble reading: “With Ryanair my whole family will be able to attend my wedding.” No wedding had even been announced. Carla took umbrage. Faithful Nicolas backed her up. Ryanair has always been big in France. Today it is even bigger. For 60 grand O’Leary has insinuated Ryanair into the bedroom of the most topical couple in the world.

Carla Bruni normally charges half a million for associating herself with a product. Michael has nailed her to the Ryanair story for 60 grand. Were O’Leary’s antics in France a deliberate distraction from the disastrous results announced earlier this week? Was the maestro mischievously diverting the eyes of analysts from the figures?

Hardly. Although the results from Ryanair were woeful, O’Leary managed to turn them into a tour de force. He up-ended the normal conventions. Just imagine if Aer Lingus had been releasing similarly depressing numbers; operation “automatic pilot” would have kicked in. First, there would be the results announcement, with Dermot Mannion painting a picture of a rosy 2008. All that guff about “being positioned for an upturn” would have been trotted out. The old “cyclical industry” excuse would have been repeated. Dermot would be on message.

Next, an army of spinners would set to work on the media, parroting the words of optimism. One-to-one interviews with Dermot would be offered to favoured journalists. The spinning would be carried out with military precision. Finally, all Ireland‘s tamed stockbrokers would be briefed. The company’s own brokers would be called in. Other analysts would be fed the party line. Brokers would oblige. “Buy” circulars would hit the websites.

Funnily enough, on Thursday, Aer Lingus issued some pretty ropey figures revealing a drop in long-haul seat sales. The company expressed itself “pleased” with its January performance!

Michael did the opposite. God bless him, he dropped a bombshell, burying the sycophantic stockbroking community in the manure. “Profits in the coming year could fall as much as 50 per cent to as low as €235m,” he blurted out to a shocked investment world, conditioned to the same bogus old euphemisms. The shares tanked. The stockbrokers freaked. The Ryanair boss was off message.

Davy stockbrokers commented that Ryanair’s outlook was “excessively bearish”. Decoded, O’Leary had gone walkabout. Indeed, Davy must be acutely embarrassed. How can they explain to all those clients who bought into Ryanair why the boss was causing the shares to tumble? Ditto Goodbodys. Aviation analyst Joe Gill surfaced on RTE’s Nine O’Clock News to soothe all his anxious customers. “It is the style of the company,” he insisted, “to be very cautious in the way they set out their forecasts…”

Michael had dumped on the brokers. Convention had been turned on its head. He never reads the script. He writes some heretical ones, especially about Bruni and Bertie. That is why he is the most successful Irish businessman of his generation.

What a wonderful week for Michael.