Don't Fly Into Volcanic Cloud: Ryanair CEO

European airlines should be allowed to deal with the consequences of the most recent Icelandic volcano eruption themselves, Michael O’Leary, the chief executive of Ryanair told CNBC Monday.

Ryanair CEO Michael O'Leary
Dani Pozo | AFP | Getty Images
Ryanair CEO Michael O'Leary

“If you see a big volcanic cloud you don’t fly into it," O’Leary said in an interview. “As long as the European regulators and the Met Office don’t start producing charts with big black clouds over Europe that don’t exist, we will be fine this time."

“The airlines would be better managing it than bureaucrats,” he added.

Last year, European airspace was closed for almost a week following the eruption ofEyjafjallajokull, costing airlines an estimated 130 million pounds ($209.3 million) for each day airports were closed.

Airlines subsequently criticised European governments, claiming that they had had a “knee-jerk” reaction to the ash cloud which spread following Eyjafjallajokull’s eruption.

The eruption of Iceland’s most active volcano, Grimsvotn, which last exploded in 2004, on Sunday has so far only affected the island, but experts have warned that ash from the eruption could spread south to other parts of Europe this week.

Ryanair , Europe’s biggest low-cost airline, announced on Monday morning that it beat analysts’ forecasts with a 401 million euros ($561million) net profit for 2010/11, higher than forecast. O’Leary cautioned that high fuel cost and reduced capacity during winter would mean no profit growth next year.

“I suspect we will be the only airline making a profit this year. We have got competitors out there with huge cost rises,” he said.

Air Lingus to Be Sold

The Irish airline has 90 percent of its fuel needs hedged at a cost of $820 per tonne. It expects traffic to grow four percent in 2012 to 75 million passengers, but also that average fares will grow roughly in line with increased fuel costs.

O’Leary, who is widely credited with transforming the fortunes of the budget airline, said that it will not order any new planes until 2013, as it reduces capacity during winter months. Its current fleet is made up of Boeing aircraft.

“We’re talking to Boeing, although we’re not getting anywhere, and we’re also talking to the Chinese and the Russians,” he told CNBC.

The Irish government’s 25 percent stake in Aer Lingus will soon be up for grabs after Ireland’s bailout by the International Monetary Fund (IMF), he added.

Ryanair, which already owns close to 30 percent of the former Irish national carrier, has been barred from owning a majority stake by the European Commission on competition grounds.

"Aer Lingus is a company in decline," O'Leary said. “I suspect that, given the Irish fiscal position, the IMF will make the Irish government sell off some of the state assets. However, I don’t think they will sell to Ryanair.”