Sunday 23 October 2016

Ryanair: We'll cut fares by up to 15pc as oil gets cheaper

Donal O'Donovan and John Mulligan

Published 27/04/2015 | 02:30


Ryanair expects to cut its fares by between 10pc and 15pc over the next two years as the benefits of lower oil prices are passed on to consumers, Michael O'Leary has said.

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Asked by French newspaper 'Le Journal Du Dimanche' whether prices could fall from current levels, the Ryanair chief executive said: "Absolutely, by at least 10pc-15pc over the next two years. In 2016 our average air fare could be at €40.

"This will come as we pass on lower oil prices. We will also continue to grow passenger numbers and cut our costs."

The average price of a Ryanair ticket is currently €46, according to Mr O'Leary. That compared with around €170 for a short-haul flight within Europe on other airlines, he said.

In a wide-ranging interview published in French, Mr O'Leary lambasted what he called the French "political class" but said he loved the country and its people.

He predicted that Ryanair would overtake rival EasyJet within five years in the European market.

And in a view that is likely to be carefully parsed here for any implications in terms of the potential takeover of Aer Lingus by IAG, Mr O'Leary indicated that smaller player KLM had suffered as a result of its merger with Air France.

Asked for his views on the French-led group, Mr O'Leary, whose company is Aer Lingus' biggest shareholder, said Air France should sell KLM. According to a translation of 'Le Journal Du Dimanche's report, Michael O'Leary said Air France has not been developing KLM and that the Dutch were unhappy.

He also recommended that Air France close unprofitable routes and sell a strategic stake in itself to one of the Gulf carriers.

Ryanair has largely steered clear of the debate around British Airways owner IAG's offer to buy Aer Lingus, pending the outcome of talks under way between the Heathrow-based operator and the Government.

According to a report in the 'Sunday Times', IAG is examining the possibility of making stronger commitments to maintain services to Cork and Shannon, in an effort to convince the Government to sell the State's 25.1pc stake in the Irish airline.

Any deal will have to be brought to Cabinet for approval by Transport Minister Pascal Donohoe, where the cash offer will be considered against concerns including Ireland's international connectivity to global markets - including through Aer Lingus's coveted Heathrow landing slots; the long-term viability of Aer Lingus jobs and the future of the airline's brand.

Aer Lingus holds its annual general meeting next Friday, while IAG also releases first quarter results next Thursday.

However, it is not clear at this stage whether a report being prepared for Mr Donohoe by a steering group has even been completed ahead of the two set-piece events.

Mr Donohoe will use the report to brief his Cabinet colleagues in advance of the Government making a decision on whether or not to sell the Aer Lingus stake.

However, Aer Lingus unions also expect to be briefed by the Department of Transport in advance of any decision being made.

If the Government decides to sell, a Dáil vote is needed before a disposal of the Aer Lingus stake can be formally approved.

But if the Government rejects the IAG takeover approach, the British Airways and Iberia owner, which is headed by Willie Walsh, will have to decide if it will pursue majority control of Aer Lingus.

Such an option could see it attempt to buy all but the Government's stake in the airline including the Ryanair stake.

The Department of Transport chairs a steering group preparing the report on the IAG takeover approach.

The steering group includes executives from Credit Suisse, law firm McCann Fitzgerald and IBI Corporate Finance.

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