Ireland must vote yes in the upcoming referendum on the European fiscal compact, because it has no choice but to go along with those paying for its continued existence, Michael O'Leary, CEO of budget airline Ryanair, told CNBC’s “Squawk Box Europe”.
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Ireland and European Union
“I think Ireland will vote yes in the referendum and Ireland should vote yes. We have no alternative. People who are borrowing $15 billion a year to keep the lights turned on don’t have the wherewithal to vote no to the people that are lending them the money. There is no argument for voting no,” O’Leary said.
He described “no” campaigners as a “bunch of idiots and lunatics.”
A no result in the referendum would risk the country’s $113 billion November 2010 bailout agreement with international lenders and potentially stop further funds from reaching the country.
Ireland goes to the polls on May 31 to vote on a new fiscal treaty that would further integrate the euro zone and possibly lead to the creation of Eurobonds. The country has been held up as an example of how peripheral nations in Europe can cope with the fallout of the debt crisis, but O’Leary was more critical of the country’s efforts.
“Ireland is not doing that great, the warning is that we’ll finish up like Greece. The fiscal deficit is still growing and the country is still borrowing to pay for social programs, for public servants it can’t afford,” he said.
He cited Germany as the economic model to follow, adding that its political leadership having some say in Ireland would be good, as it was “better than the half-witted politicians that Ireland has ended up with.”
Ryanair announced better-than-expected results Monday, with net profit in the year to March 2012 rising 25 percent to 503 million euros ($642.4 million).
However, he warned that the deepening debt crisis would stifle better growth for Ryanair going forward into the next financial year, with the coming winter likely to be “very tough.”
“Oil prices are up, there’s a general sentiment across Europe of recession, austerity. I think we’ll grow strongly, but the yield environment will be difficult and hard to compensate for much higher oil prices,” he said.
He dismissed airlines as a “crap” industry because it’s so heavily regulated and run by “a bunch of idiots in Brussels.” However, he said the tough environment would clear out “dead weight” European competitors.
Brenda Kelly, senior market strategist at CMC Markets, told CNBC that Ryanair’s outlook for the year may not be as bad as O’Leary had warned.
“If oil prices continue to decline, it could help Ryanair, but ultimately they have become more of a dividend stock than a growth stock, that’s what investors are looking for,” Kelly said.
