Funnily enough, Michael O’Leary did not preach a gospel of peace, love and goodwill to all pilots at Thursday’s annual meeting. Even by his standards the Ryanair chief executive’s belligerence was extraordinary.
Pilots do not have a difficult job, shareholders were told. Some are “precious about themselves” and “full of their own self-importance”. To manage Ryanair’s crisis over cancelled flights, O’Leary may force a few to re-arrange their own holidays. And, while he may have a few incentives in his back pocket, “if pilots misbehave, that will be the end of the goodies”.
O’Leary, one assumes, is confident the current storm will pass but you have to wonder whether his approach can possibly make long-term commercial sense. First, even if they enjoy a comfortable life, pilots are trained professionals in a regulated industry and probably don’t like being addressed as overprivileged schoolchildren. Second, the planes can’t take off without them. Third, even Willie Walsh, when he was in full cost-cutting mode at British Airways, knew better than to pick a fight with the pilots.
O’Leary, one senses, feels he will prevail because he isn’t dealing with a union. “I don’t even know how there would be industrial action in Ryanair,” he said at the meeting. Yet that analysis skirts around the fact that some of the pilots would like to unionise, as they do at most other European airlines. At the very least, they may see this crisis as a one-off opportunity to secure permanently higher pay and better conditions. They may also to want to escalate matters by attracting regulators and politicians to the drama.
A conventional chief executive would be looking to turn down the heat. That’s not O’Leary’s style, which makes events unpredictable. The City’s lack of concern, seen in a share price that has barely moved, remains baffling. Bloody-mindedness can be a great strategy until it isn’t.
Tech giants don’t need to be afraid of tax reform – yet
That the likes of Google, Amazon and Facebook are undertaxed, at least in Europe, barely counts as news. But here’s the European Commission’s tally: digital businesses with international operations pay a 10.1% tax rate on average in the EU, compared with a 23.2% rate levied on traditional companies.
What should be done? At that point, the report will sound considerably less scary for the US tech giants. It sets out three options but the preferred choice – a common corporate tax base across the EU – is clearly miles away from becoming a reality. It’s hard to imagine Ireland, and many others, signing up. A French proposal to tax turnover, even if it could attract more support, requires a digital company to be defined.
One fears commissioner Pierre Moscovici’s call for “consensus” was made more in hope than expectation. The EU’s progress looks to be painfully slow, and the Organisation for Economic Co-operation and Development, which is a bigger player in this debate, won’t deliver its report until next year. This is important territory – but likely to remain unaddressed for a while.
Compass chief executive served up some tasty numbers
The success of Compass Group has been under-reported, spiky chief executive Richard Cousins has sometimes said. That view is probably fair. So, as he announces his departure next year after 11 years at the contract caterer, let’s do him a favour and record the excellent numbers on his watch. The share price has risen nearly sevenfold and, when you add up dividends and share buy-backs on the way, the total shareholder return has been 833%. Impressive.
That is especially so when you remember that Compass was a shambles back in 2006. It had to pay £40m to settle two lawsuits brought against it for allegedly bribing a United Nations official to win contracts. Compass has kept its nose clean since then and risen to global leadership without flashy acquisitions. In the market for providing in-house catering for companies, schools, hospitals, and so on, only French group Sodexo gets close. It has been a classic turnaround tale, followed by years of steady growth and compounding returns.
If the wider world was slow to notice, Compass’s board definitely was not. Cousins has been paid £43m over the past eight years. He can’t grumble on that score.
