Monday 19 November 2018

Ryanair betting on new Poland and Austria units to fuel growth

Analysis

Ryanair CEO Michael O'Leary
Ryanair CEO Michael O'Leary
John Mulligan

John Mulligan

Next year, Ryanair will take delivery of the first of its Boeing 737 Max jets, which offer 4pc more seats and 16pc less fuel burn. It's one of the ways the carrier is planning to continue beating rivals on its unit costs as it faces higher fuel prices and wages.

But Ryanair's future growth may not come from where you'd expect.

Ryanair chief commercial officer David O'Brien yesterday pointed to expansion possibilities in France and other established markets. The airline recently announced that two bases will open in France next year, with more to follow. Mr O'Brien said that Ryanair is likely to double its presence in France over the next 18 months. Next summer, more that 50pc of the airline's growth is targeted at its top three markets.

But Michael O'Leary said that the group's real growth will come from outside the main Ryanair operating unit.

Ryanair acquired 75pc of Austrian low-cost carrier Laudamotion this year. According to Mr O'Leary, Ryanair is likely to acquire the remaining 25pc of Laudamotion from Niki Lauda in the next 12 to 24 months.

Ryanair is doubling the size of its Ryanair Sun scheduled and charter operation in Poland next summer to about 20 aircraft. Laudamotion will be a similar size next summer, but Mr O'Leary has previously signalled that it will eventually increase to at least 30 aircraft.

Meanwhile, Ryanair also expects to have a UK air operator's certificate (AOC) by the end of this year that will allow it to keep operating its domestic routes there post-Brexit.

"We expect over the next number of years that much of our growth will take place through either the Ryanair Sun vehicle in Poland, and/or, LaudaMotion in Austria and in Germany," said Mr O'Leary.

"I think that's a more sensible way for us to grow - to have multiple AOCs, a number of different brands within the business."

The CEO also expects to have signed union agreements in Germany and Belgium around Christmas time.

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business