Ryanair new strategy?
 

Hi All,

Just a thought. Ryanair has been rejected a third time to get Aer Lingus.
Now they (Ryanair) are expanding all over Europe on main APs. (FCO, AMS, CGN, MXP, etc,)

Couldn't Mr. MOL think, "if I can't "buy" Aer Lingus, I will outbeat them by price?"
It would be only a matter of time that big National Carrier will be forced to do something, as they do have a Hub and Spoke System, but are still "restricted" to one Country and don't have the flexibility of bases all over Europe as Ryanair.
If Ryanair focuses on one Market in order to achieve its goal e.g. force Aer Lingus to give up the fight, he takes over the whole market, rise fares in order to battle a new Country/Airline e.g. KLM.

What are your thoughts on that?

PS Focus in on European Market :)

It's a national flag carrier with 25% state ownership. They won't sell out for pure financial reasons unlike an investor.

Now that we have European Budget Airlines forum this post belongs there, so I am moving it.

EmailKid
Budget Travel moderator

Where's ME GOOOLD???!!!!

http://www.youtube.com/watch?v=f_T46muloPM

They have certainly started to change. Fixed seating, will shave most fees etc.

Long-Haul Strategy
 

I never really understood what an Aer Lingus-Ryanair merger would look like - Ryanair seems pretty dedicated to their exclusively 737 fleet and inter-European flights. O'Leary is reported to have be a big fan of Southwest - another exclusive 737 airline.

O'Leary has reported interest in expanding to a trans-atlantic service, something that Aer Lingus has some of the infrastructure for, but O'Leary said that 787s were the ideal aircraft for this service.

What would he do with all of the Airbus aircraft that he would be buying along with Aer Lingus? Surely the slots at the Dublin airport can't be that valuable (as the airport is operating well under capacity). Maybe they are just looking for the international gate slots that Aer Lingus has at other airports, namely in the US? Seems like there would be cheaper and cleaner ways to acquire these slots.

Am I missing something? Is this just about price competition? What's the big benefit to Ryanair of acquiring Aer Lingus? I'm not an expert on Irish law, but would Ryanair also assume union contracts and frequent flier program debts?

Either way, seems like recent reports indicate that Ryanair is moving their focus elsewhere - something that seems to make a lot more sense to me.

You mentioned "international gate slots that Aer Lingus has at other airports, namely in the US". This is wrong - it is their slots at Heathrow which are by far the most attractive (and valuable) of all of Aer Lingus's slots. An Aer Lingus that had been taken over by Ryanair would likely have either sold/leased out most or all of those slots, or used them on more lucrative routes than the LHR to DUB/SNN/ORK/BHD routes that they are currently used for. Only BA (50.6%), Lufthansa (5.4%) and Virgin Atlantic (5.2%) hold more slot pairs at Heathrow than Aer Lingus (3.5%) [All figures for Summer 2013].

The Irish government has long been reluctant to sell its holding in Aer Lingus for fear that the new owners would do just this - plunder the valuable Heathrow slots, and drastically reduce Ireland's connections with the outside world (the Heathrow slots are seen as a very valuable link for Ireland).

However - you can rest assured that Ryanair will never be allowed to take over Aer Lingus. In fact, it is currently appealing a UK Competition Commission ruling that it sell down its shareholding to 5% (from its current ~29%). Most analysts expect the Ryanair appeals to be unsuccessful.

If Michael O'Leary ever does get a chance to run Aer Lingus it will only be after he resigns from Ryanair...and even at that it would be a stretch to imagine him being offered the job....

My understanding of this though was that they would be selling these slots were they to acquire Aer Lingus. (This article)

Do you think that the reason they wanted to acquire Aer Lingus was just so they could immediately sell these slots? Given Heathrow's landing charge it seems unlikely that Ryanair would operate out of Heathrow, even on TATL services (a very distant pipe dream any ways).

But yes, you're right that this whole conversation is somewhat futile given their repeated inability to takeover Aer Lingus.

Aer Lingus would be a very good buy. Its net cash balance is almost equal to its stock valuation, to say nothing of its assets. It's also been profitable in each of the last several years.

Ryanair is an ultra-competitive airline and particularly so in its home country - Easyjet never dared to enter the Irish market, and Ryanair successfully drove out most other budget airlines that attempted to serve Ireland.

Whether O'Leary sees the entire Irish market as his for the taking, or whether the continual knock-backs just spur him to try even harder to take over Aer Lingus - who knows. But he does seem to have an unhealthy obsession with EI.