February 5, 2008 | posted by Michael Baxter in Airlines |

As central bankers come out in a cold sweat, and as property investors start questioning the premise that house prices only ever go up, at least one man seems anxious to bring on a recession.

For Michael O’Leary, Ryanair’s colourful boss said yesterday, “We would welcome a good, deep, bloody recession for 12 to 18 months.”

Actually, Mr O’Leary was revealing some worrying predictions. He said profits at the airline could fall by as much as 50 per cent next year, and said, “At our most optimistic, a combination of flat yields and $75 oil would see profits grow by 6 per cent to approximately €500m, but at our most conservative, if forward oil prices remain at $85, and consumer sentiment/sterling weakness lead to a 5 per cent reduction in yields, then profits in the coming year could fall by as much as 50 per cent, to as low as €235m (£175m),” He also talked about a “perfect storm” of higher fuel prices at a time of recession.

But later on, he struck a more-tuneful note when he said, “In many ways we would welcome a chill or something even colder. We need a deep dark recession. It would be bloody good for the industry. It would help see off the environmental nonsense that has become so popular among the chattering classes.”

O’Leary is famous for his intolerance of the environmental brigade. Although actually, a tax on fuel, the very thing the Ryanair boss is so opposed to, is just what economic theory would recommend to combat climate change.

It’s a funny thing with airlines though. Ryanair is profitable, but this is an industry that is famous for making losses.

Yet, air travel surely has been a key driver behind globalisation, and within the US itself, a driver behind trade across the world’s richest economy.

The airline industry’s failure to generate profits that are in any way commensurate with the economic benefits they bring, is quite odd.

But then, in a way, the Internet is not dissimilar. Actually, dotcoms really make quite modest profits, in comparison to their economic impact.

Although the NASDAQ still sits at around half the level it reached during the heyday of the dotcom boom, the investors of that era were right in the sense they correctly evaluated the Net’s importance. They just failed to see how the profits would be shared between consumers and business.