Wednesday, 16 November 2011

Ryanair: Future growth driven by airport deals ©

Ryanair indicated in its half-year results that future growth will be driven by the best airport deals which will be opportunistic, as another wave of airline consolidation begins to take hold across the European airline sector, as the Euro debt crisis further erodes economic activity coped with high fuel costs.

The Ryanair CEO Michael O’Leary revealed that the airline is currently talking to thirty new airports not currently served by the carrier Ryanair Conference Call (7th November), after indicating in September Central Europe and Scandinavia will be the focus for expansion in the next two to three years Bloomberg (4th October).

The airline indicated its average sector length will decline as Central Europe and Germany will be in focus. The Ryanair CEO Michael O’Leary indicated airports in Germany where offering ‘Exceptional Deals’ in the aftermath of the Air Berlin ‘Shape & Size’ re-structuring plan, as regional airports will lose flights and routes Ryanair Conference Call (7th November).

On the 19th of October the carrier announced its first base in Central Europe with the launch of a new base in Wroclaw with a single Boeing 737-800 operating six new routes from March 2012 in addition to eight existing routes.

The carrier stated it is in negotiations to open a new base in Warsaw Modlin in 2012 where it is planning significant expansion, initially launching the base with 10-12 routes (19th October). The goal of the carrier is to base 10 Boeing 737-800s operating 40 routes carrying 3.5 million passengers over five years Warsaw Business Journal Online (24th October).

On the 25th of October the airline announced a new base in Baden-Baden (Karlsruhe), becoming its 47th European Base with two Boeing 737-800s operating 19 routes from the 26th of March, with the new based aircraft taking over many of the 12 existing routes Anna.aero (26th October).

According to Anna.Aero Ryanair is currently the third largest carrier in the Polish market behind Wizzair and LOT Polish Airlines, therefore their scope for huge growth in this market. The conditions are ripe for growth with the Polish GDP growth forecast at 2.5% in 2012 well above the EU average of 0.5% Warsaw Business Journal Online (11th November).

In a surprise move the airline announced four new routes from Brussels Charleroi, Girona, London Stansted and Malaga to Turku in Finland. This demonstrates as the carrier evolves with market opportunities both primary and secondary airports will be part of the mix. These new routes will build its footprint in the Scandinavian market, with new routes already announced from it's Oslo Rygge and Stockholm Skastva bases for summer 2012.

As the pace of consolidation accelerates across Europe this winter no doubt further opportunistic deals will become available in due course. A number of carriers have already issued profit warnings and indicated plans to scale back capacity, while other carriers indicated further re-structuring will be necessary in the short-haul market.

I enclose a recent Bloomberg Interview with Ryanair CEO Michael O'Leary (7th November 2011).

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










Irish Aviation Research Institute © 16th November 2011 All Rights Reserved.
 

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