Monday 19 February 2018

Ryanair eyes 25pc stake in Stansted after sell-off order

John Mulligan

John Mulligan

Ryanair is virtually certain to buy as much as 25pc of Stansted Airport in the UK -- its biggest base -- after owner BAA was ordered to sell the facility to boost competition.

Ryanair boss Michael O'Leary said yesterday that the low-fares carrier would be willing to take a "sizeable minority stake" in the airport as long as it did a deal with a "like-minded party".

Speaking to the Irish Independent, Ryanair deputy chief executive Michael Cawley confirmed Ryanair had already had discussions with five consortia interested in buying the airport when it is formally put up for sale. It's likely to have a price tag in excess of £1.2bn (€1.5bn).

Ryanair would probably contribute as much as €185m in equity to a purchase.

The UK's Court of Appeal last week dismissed last-ditch efforts by Stansted owner BAA -- controlled by Spain's Ferrovial group -- to prevent it being forced to offload the airport by the UK's Competition Commission.

"It's only a matter of time," said Mr Cawley about whether Ryanair would become a part-owner in Stansted. "It's the right thing to do."

He said the five consortia Ryanair had talks with include potential investors from around the world, including pension funds and established airport owners. Manchester Airports is among those interested in bidding for Stansted.

Mr Cawley said he wasn't certain at this stage whether competition issues would arise.

Ryanair revealed the plans as it posted a 29pc fall in after-tax profits for the first quarter of its financial year, to €99m.

It said the figure had been hit by a large increase in fuel costs in the period, as well as the impact of austerity measures and dampened EU economic growth.

Fuel costs

Fuel costs rose by 27pc, or €117m, to €544m in the quarter and accounted for 47pc of all operating costs in the period.

Revenues rose 11pc to €1.28bn, with its average fare having climbed 4pc in the quarter. Ancillary sales, including everything from cups to tea to travel insurance, were 15pc higher at €286m and accounted for 22pc of total revenue.

The airline is planning to ground a large number of aircraft this winter to keep costs down. "It's a little bit early to say precisely how may aircraft we will ground," said Mr O'Leary. "Last year it was 80. There are still some negotiations ongoing with airports and governments around Europe. It could be a bit less than that, it could be a bit more than that."

He also reiterated guidance for the full current financial year for generating profits of between €400m and €440m.

Mr O'Leary was unable to comment in detail on Ryanair's third attempt to buy Aer Lingus.

"An extensive process of engagement with the EU Commission is under way. We expect to run through until the end of August or mid-September and we're not willing, nor do we believe it appropriate, to comment publicly on the process."

He said he wanted the EU Competition Commission to have "every opportunity" to consider competition issues and the remedies Ryanair would be tabling. Aer Lingus releases its first-half results this morning.

Meanwhile, Ryanair is preparing to beef up its presence in Greece, according to Mr Cawley.

He said he met last week with the country's finance, tourism and travel ministers who are keen for Ryanair to boost services to the financially stricken nation. It already serves close to 10 airports in Greece, including those at Salonika, Crete and Corfu.

Irish Independent

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