Michael O’Leary changes his tune on Brexit

While Michael O'Leary said on Tuesday that Brexit won't have a long-term impact on Ryanair, this sanguine statement comes after a series of warnings from the airline he runs that the UK's departure from the EU would not be a positive for the airline business.

Indeed, in 2017, Mr O’Leary warned that Ryanair may have to stop selling flights to and from the UK at the end of 2018 altogether if a post Brexit aviation deal wasn’t agreed.

But even more recently, in October 2018, Mr O’Leary warned that in the event of a hard Brexit, Ryanair planes in the UK could be grounded for up to three weeks.

It also paused share buybacks in 2018 as a result of Brexit uncertainty.

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But despite these periodic interventions, Ryanair’s longer term strategy over the past few years doesn’t appear to have been up for discussion. One indicator of that is its commitment to buy a raft of Boeing 737 Max aircraft which came as the Brexit fallout intensified.

What else has the airline said on Brexit?

In its 2016 annual report, Ryanair mentioned the term Brexit 20 times and referred to it as “both a surprise and a disappointment”.

"Ryanair as the UK's largest airline had campaigned actively for a "Remain" vote. We expect this result will lead to a considerable period of political and economic uncertainty in both the UK and the European Union. This uncertainty will be damaging to economic growth and consumer confidence," the company said at that time.

However, it stopped short of making any predictions as to what effect the move would have on their business – noting that while they’ll put contingency plans in place for all eventualities, it would wait until some clarity emerged over the “next two years”.

One effect it does appear to have had is to push Ryanair’s business away from the country. In its 2016 report, the airline said about 28 per cent of revenue in “fiscal 2016” came from operations in the UK. That had fallen to 22 per cent of revenue in fiscal 2019.

In any event, Ryanair remained concerned about Brexit in the years following the referendum vote. In its 2017 annual report, they said: “we remain worried at the continuing uncertainty which prevails over the terms of the UK’s departure from the EU in March 2019”.

In particular, it said it was campaigning for the UK to remain in the EU open skies agreement noting that if it leaves that, “there may not be sufficient time, or goodwill on both sides, to negotiate a timely replacement”.

“Our initial discussions with the UK government do not suggest that they realise the urgency of this problem.”

Adverse impacts

By 2018, the language at Ryanair was much the same. It said that while there’s a general belief that a transition agreement to December 2020 will be implemented, the “likelihood of a hard Brexit may have an adverse impact on the business operations of Ryanair”.

And by its 2019 annual report, the Brexit debacle appeared to have a tangible effect on the company’s business. “Demand and pricing in the UK has also been dampened by continuing concerns over Brexit and slowing economic growth.

“The challenge of Brexit, and in particular the risk of a “no deal” Brexit remains worryingly high. We hope that Brexit will be delivered by agreement between the UK and the European Union, which will minimise disruption to both the UK and the EU economy.

“However, Brexit is causing considerable political uncertainty in the UK, it has damaged investment, economic activity, and consumer confidence, and has been a major contributor to the weakness of air fares and consumer demand for flights from/to the UK.”

So while that may have been the case, Mr O'Leary's change of tone suggests that Europe, more than ever, will be the ongoing focus for Ryanair.