Further airline consolidation imminent?

1 Dec 2008 by Mark Caswell


Ryanair has made a fresh bid to buy rival Irish carrier Aer Lingus, while Flybe is rumoured to be in talks to take over Bmi’s regional and low-cost subsidiaries.

Ryanair, which currently owns just under 30 per cent of Aer Lingus, says it has made a cash offer of €1.40 per share for the remainder of the company, valuing the airline at €748m.

A previous offer in 2006 (which valued Aer Lingus at €1.5bn) was blocked by the European Commission, which said it would have left the combined carrier controlling over 80 per cent of flights to and from Dublin airport. But Ryanair’s CEO Michael O’Leary said that “the world has changed dramatically over the past two years, as high oil prices and deep recession have caused a flood of airline bankruptcies, consolidations and capacity cutbacks”.

O’Leary pointed to “accelerating EU wide airline consolidation”, with a raft of mergers and takeover bids either announced or proposed, including Easyjet and GB Airways, Lufthansa and Bmi, Air France/KLM and VLM, and British Airways and Iberia.

If the deal went ahead, Ryanair says both airlines would continue to operate as separate companies, in order to preserve “the best features of both, including Ryanair’s low fare, high punctuality operations, and Aer Lingus’ special brand, service culture as well as its long haul operations”.

Meanwhile a report in The Mail on Sunday says that UK regional carrier Flybe is in talks with Bmi to take over its subsidiary airlines Bmi Regional and Bmibaby.

Lufthansa is due to take a majority stake in Bmi early next year (see online news October 29), and according to the report the two subsidiaries, which account for around 40 per cent of Bmi’s turnover, are not core to the German carrier’s strategy.

Both Bmi and Flybe declined to comment on the speculation.

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Report by Mark Caswell

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