Business Irish

Sunday 31 August 2014

Ryanair in talks with other airlines over London routes

Peter Flanagan and Ralph Riegel

Published 20/08/2012 | 05:00

  • Share
Ryanair is expecting traffic growth of 1pc between September and March, down from 7pc this summer following winter capacity cuts.

RYANAIR is in talks with a host of airlines, including Richard Branson's Virgin, in an effort to ease competition issues that could prevent its takeover of Aer Lingus.

  • Share
  • Go To

The so-called budget airline has held talks with Virgin about the UK carrier taking on Aer Lingus's Dublin-London routes if Ryanair successfully buys Aer Lingus.

One of the potential roadblocks to Ryanair's takeover is that Aer Lingus and Michael O'Leary's carrier control about 80pc of routes out of Ireland.

If Virgin or another airline took on the London routes, that would reduce this percentage substantially.

News of the negotiations came as Ryanair confirmed it is in talks to complete what would be the biggest aircraft order ever made by a European airline, with the potential delivery of up to 300 new planes.

The order -- which could exceed €10bn in value -- is set to underpin the budget airline's determination to achieve 130 million passengers in traffic within the next five years.

Ryanair has confirmed it will now take delivery of its final batch of Boeing 737-800s secured under a record 100-aircraft order placed back in 2002.

A total of 11 new 737s are due for delivery by early 2013 from Boeing's US assembly plant.

Deputy chief executive Michael Cawley confirmed that negotiations about a new order are underway -- though the airline refused to reveal if the talks involve the giant US aircraft manufacturer or their bitter rivals Airbus.

Leverage

Ryanair has even tried to leverage down the asking price by courting fledgling aircraft manufacturers Irkut in Russia and Comac in China.

However, Ryanair -- with an all-Boeing fleet -- is understood to be keen to strike a deal with the US manufacturer, which could include options on long-haul aircraft that would allow the airline consider entering the transatlantic market.

The airline is interested in up to 300 new aircraft which, over a phased 10-15 year delivery period, will allow the gradual sell-off of older planes within their existing fleet.

However, Ryanair's Michael O'Leary has twice walked away from negotiations with Boeing in 2008 and 2010 after the US firm refused to match the Irish airline's discount demands.

Despite the fact Ryanair now boasts one of the youngest fleets of any European carrier -- with an average age of less than three years -- the airline is determined to secure its future expansion with a major fleet order.

However, unlike 2002, Boeing has strong orders for its short-medium haul aircraft.

It has received over 4,000 orders for the Boeing 737-800 series aircraft, with just over 2,500 delivered.

The new Boeing 737-900 series plane is also selling well, and the US firm has refused to grant Ryanair similar discounts to the 2002 deal.

The problem for Ryanair is that Boeing has received 737 orders from new Asian airlines and, after a spate of consolidation in the US airline sector, from American carriers.

This has kept aircraft prices high with a new Boeing 737-900 priced at €72m. For bulk orders, however, airlines rarely pay the list price, and usually get a discount of some 40pc.

Irish Independent

Read More

Editors Choice

Also in Business