Is Ryanair Stretching Itself Thin?
The Economist recently summarized Joseph Lampel’s (Professor at the Cass School of Business) reaction to Ryanair’s planned expansion. Professor Lampel believes the expansion represents a poor decision on the part of Ryanair CEO Michael O’Leary (see Michael O’Leary’s lessons from Napoleon and Ryanair Eyes Fresh Growth).
Joseph Lampel’s opinion (as quoted by the Economist):
One of history’s enduring mysteries is why Napoleon invaded Russia. He had an empire…and the all round title of military genius. And yet he could not resist the lure of complete domination of the European continent…he wanted…total victory.
One gets the same feeling reading the news release about Michael O’Leary’s ambition to acquire 300 aircraft…The goal is to grow Ryanair to 130 million passengers, which would make the airline the largest in Europe…
What is clear is that he sees the current economic crisis as an opportunity to push aggressively forward where other airlines fear to tread. The risk he runs is that an extraordinary success story will come apart…this expansion will stress Ryanair’s organizational capacity…
Perhaps he should take a lesson from Napoleon. When told by his advisers that the winters in Russia were exceptionally long and cold he insisted that they were misinformed…He lived to find out that reality can bite.
While Ryanair sees the acquisition of 300 additional aircraft as an opportunity to steal share in an economic downturn, I tend to side with Professor Lampel on this one. I think the planned expansion might reflect a bit of Napoleonic hubris. Not only will the expansion stretch the organization thin, but this is an incredible risk to take while Europe is in the midst of a crisis that threatens to turn into a nasty, and protracted, recession (see OECD warns of Euro Recession). A deep recession on the European continent would not bode well for travel in general, and air travel in particular.