Sunday 23 October 2016

Ex-Ryanair man Declan Ryan eyes stock market flotation for Mexican airline

John Mulligan and Brendan Case

Published 14/04/2016 | 02:30

A Ryanair plane lands at Ireland West Airport Knock
A Ryanair plane lands at Ireland West Airport Knock

VivaAerobus, the Mexican airline that's almost 50pc-owned by Declan Ryan's Irelandia Aviation, is drafting a fresh blueprint for a stock market flotation after it pulled plans for an initial public offering (IPO) in early 2014.

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And Mr Ryan - a son of the late aviation finance pioneer Tony Ryan - is also eyeing opportunities in Cuba.

The Caribbean island is on the cusp of a major tourism boom as it is in the process of normalising relations with the United States after decades of isolation.

Declan Ryan also once served as chief executive of Ryanair.

VivaAerobus, with a low-cost model, is Mexico's fourth biggest carrier with a 12pc market share.

It was established in 2006 as a joint venture between Irelandia - a Ryan family investment vehicle - and Mexico's Grupo IAMSA, the country's biggest bus company.

It currently has 23 aircraft that are in service and is almost finished transitioning its fleet to Airbus A320s. It also has 40 Airbus A320-200neos on order. It made a $25m profit last year, reversing a $7.6m loss it posted in 2014.

Irelandia, which is based in Dublin, has a track record of investing in startup airlines.

It has a 46.1pc stake in VivaAerobus. Its investments have included stakes in Singapore-based Tiger Airways, as well as US-based Allegiant.

VivaAerobus was about to pull the trigger on a stock market flotation in February 2014, but cancelled the planned listing just as the shares were due to be priced, because of stock market volatility. The stock was due to start trading the next day.

VivaAerobus had intended to raise up to 3bn pesos (€165m at the time) and use the proceeds to expand its fleet, reduce debt and for general corporate purposes. About 21pc of the shares that were due to be sold in the offering were to have been offloaded by the existing investors.

Mr Ryan told news agency Bloomberg that the flotation would now be considered for early 2017, depending on market conditions. He said the airline is currently studying how much it could raise.

VivaAerobus carried 4.5 million passengers in 2015, which was 13.7pc more than in 2014.

It has been focusing expansion on the domestic Mexican market. It currently only serves one international route, with a service between Houston, Texas, and Monterrey. The airline said late last year that it would consider additional international routes and US alliances.

Mr Ryan added that the Viva investment group, which also has a stake in VivaColombia, is now eyeing other opportunities in South and Central America.

New services could also be branded under the Viva name. VivaColombia has a 20pc share its home market, according to Mr Ryan.

VivaColombia is backed by Grupo IAMSA, Irelandia, Colombia financial and construction group Bolivar, as well as seed investors Grupo Fast.

The internationally-recognised CAPA aviation research group said this week that VivaAerobus could elevate its position in the Mexican market if there is enough demand to sustain the growth plans of the country's largest airlines.

The top three carriers in the market are Aeromexico, Interjet, and Volaris.

"With a newer fleet of Airbus narrow bodies, markets in Central America or the Caribbean could be of interest to VivaAerobus, and allow it some needed network diversity to make it less dependent on Mexico's domestic market," according to analysts at CAPA. (Additional reporting: Bloomberg)

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