Business Irish

Thursday 21 September 2017

'In the airline industry, if you are complacent, you're dead'

Cityjet chief executive Christine Ourmières
Cityjet chief executive Christine Ourmières
John Mulligan

John Mulligan

'Exhausting." Cityjet chief executive Christine Ourmières almost slumps in her seat as she recalls the nearly 30 first round pitches she and the airline's chief financial officer Michael Collins gave to potential buyers of the company between October 2012 and early 2013.

And for a marathon runner used to pounding the pavement (despite being up to her tonsils in takeover paperwork she found time last month to take part in the Paris marathon) that must be saying something.

The sale of the Dublin-based airline by Air France-KLM was only recently completed, with Germany's Intro Aviation acquiring it. Air France cleared the slate, handing over the loss-making carrier on a debt-free basis (in recent months, an Air France finance unit pumped over €62m into Cityjet to help it clear remaining debts). Under the sale, Ourmières and Collins (who's also deputy CEO) each took a 7.5pc stake in Cityjet, aligning their own financial fortunes with that of the business.

And while no purchase price was disclosed, analysts believe that Intro Aviation, which has a track record in trying to fix ailing airlines, may have paid next to nothing for Cityjet. Ourmières (49) isn't spilling the beans though. She's only willing to describe the transaction as "complicated". She points out, however, that Air France didn't retain any equity stake in Cityjet, which it had fully acquired in 2000.

"Both sides of the table think this is a good deal," she adds. "We have a good relationship with Air France."

Ourmières and Collins pitched Cityjet to investors using a business plan they and the rest of the management team, rather than Air France, had formulated. Dublin-based Key Capital was hired by Air France to help with the sale.

"When you write the story with your team, it's fantastic motivation to follow up and to be part of the adventure. I think it's very difficult to sell an idea if you don't believe in it," says Ourmières, who has a Masters in Aeronautics and an MBA from the Essec Business School in France (the day after her interview she was planning to head to Lille in northern France, where her eldest son is studying engineering and, says Ourmières, also starting to talk about aeronautics).

"There were many different options for the future of Cityjet," she adds.

One assumes that one of them that must surely have crossed the mind of Air France executives at some point must have been to shut it down. After all, Cityjet – which also has a Belgium-based subsidiary – has very rarely made a profit and deep pockets and largesse will only ever last so long.

Even when Ourmières was parachuted in by Air France to run Cityjet back in 2010, rumours were rife that she was there to wind it down. She wasn't, but as the years passed losses continued to mount and staff saw a sales process drag on and on, all sorts of conspiracy theories must have been doing the rounds at the watercooler.

Ourmières, a native of Avignon in Provence, admits they were, especially as the sale process progressed and a data room was made available to potential buyers so they could undertake due diligence. That generated a lot of unidentified suit traffic through the Cityjet HQ in Swords, close to Dublin Airport, where about 300 of the group's 750 staff are based.

"They see people coming in. Amazing rumours – that another airline would buy us, all the airlines in Europe, rumours about me moving out of the process," she says, adding that staff had to be kept in the dark because of confidentiality.

"If you start to say something's not true, then what do you say?"

As the whole thing dragged on, did she ever get to the stage where she wondered if the whole process would ever come to an end?

"I think at some point, yes, it was exhausting, but my management team was so supportive and without the motivation from them it would have been difficult," she explains. "But we had a strong belief in our story."

Ourmières also reveals that Cityjet founder Pat Byrne, who was chairman of the airline's board until the sale was finalised, was hugely supportive since she started at the carrier. She describes him as a mentor through what were some very difficult times.

"At the end of the day, as a CEO, you're a little alone, and you have to carry on. It's good to be able to talk to some people who know the company and who really understand where we are going."

Intro Aviation's managing director Peter Oncken, who led the acquisition negotiations, is now chairman of the Dublin carrier.

But if the sales process was tough (it took about two years all told), transforming Cityjet into a profitable carrier will be just as challenging for the French airline boss.

Cityjet made a €21.3m operating loss in 2012, a figure that showed a significant improvement last year, according to Ourmières, who won't say what the actual number was.

Hans Rudolf Woehrl, the founder and CEO of Intro Group (who's now a Cityjet board member and its chief adviser), recently said that he expects Cityjet to be profitable or at least to break even by next year.

"I'm not sure, everything is open," he said at a recent press conference. He pointed out that fuel costs and competition would be important factors in Cityjet's financial progress.

But Ourmières believes freedom from Air France will propel Cityjet into the black (until 2017, it has a deal to operate flights from Paris Charles de Gaulle for Air France). It can now pursue agreements with airlines it was not able to approach as a subsidiary of Air France, while it's also transforming its ticket distribution system and is has the leeway to alter schedules, frequencies and routes as it sees fit.

Cityjet, which carried about 2.2 million passengers last year, is the largest operator at London City Airport, which is headed by former Dublin Airport Authority boss Declan Collier. Cityjet's London-Dublin and London-Amsterdam routes are its busiest. It also flies to destinations such as Nantes, Florence, Brest and Dresden (Ourmières winces as she says how a route to Nuremburg – the home of Intro Group – was recently axed as it was too expensive to run).

A new route has just opened between Cambridge and Dublin. Ourmières points out that there's a significant pharmaceutical presence in the English city, for example, which should help to generate traffic between it and Dublin. There are also US military bases with about 50,000 personnel, which Cityjet is hoping might generate some transfer traffic via Dublin to the US.

A few years ago, Ourmières said that the average Cityjet passenger was male and 45. What's it like now?

"The same," she laughs. "I don't think I'll be able to change the profile of the business traveller. But we have not been really working on the leisure market in the past. But being independent we can be more creative."

Also on the agenda is a re-branding, which has been handled by London-based brand agency Hat-Trick Design. Hat-Trick's clients include the likes of the Williams Formula 1 team and the Wimbledon tennis club. The first visible change for Cityjet customers will probably be its website.

She won't divulge how much that rebrand is costing. "We don't have deep pockets so we have to be very cautious," she says, adding she's not sure at this stage whether the aircraft will be repainted. One might be to showcase the new brand, but re-doing them all would seem a pointless exercise when Cityjet is also eyeing a major fleet renewal programme next year (it currently has 19 Avro jets and 12 turboprop Fokkers). Its choice of potential aircraft is limited due to London City Airport's short runway.

Meanwhile, she's gearing up to run a 12km charity event on Budapest Airport's runway in September. Among her competitors will be Ryanair's chief marketing officer Kenny Jacobs, and Aer Lingus chief commercial officer Stephen Kavanagh.

"Running is part of who I am," says Ourmières. "I've done skydiving but I still have one or two more things on my bucket list. I want to visit maybe Kilimanjaro or Angkor."

She says she likes to remain challenged. Cityjet fits the bill then, and she knows that she'll be kept on her toes.

"In this industry, if you're complacent, you're dead."

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