Originally Posted by
beachbumflyer
Chief Executive Officer Michael O’Leary says he won’t accept terms that jeopardize the low cost base that’s made his company so dominant in short-haul flying.
Paradoxically for Michael, the low unit cost is a result of two things 1: Over supply of pilots 2: Adversarial employment relations.
The entire business model is flawed. It is flawed for an elementary reason, with pre- condition 1 not being met, pre- condition 2 no longer holds.
Therefore given that operating unit cost is effectively fixed (with the exception of labour) and reduction in asymmetry is ipso facto a risk to business continuance of this model.
Unless RYR abandons their pre - conditions which from all elements of the business are driven, they may well find their business model is a continued but inevitable decline. .
As is well known, they cherry picked the elements they wanted from Southwest's model leaving out the most important part; treating people with respect.
This is precisely why, as detailed eloquently Jody Gittel, despite a lower unit cost for RYR, their productivity was no where close.
Effectively there is nothing new, business that treat employees well, who in turn treat customers well, add far more value to a business that can be input on a spreadsheet.
The chances of Mr O'Leary having a 'Road to Damascus' moment are not good...
The question for the board is when do they begin the hunt for a replacement who gets the real vulnerability of their current structure.
Perhaps it is time to send him to the woodshed?