Chief Executive of Irish airline carrier Ryanair, Michael O’Leary, has never been known as a shy or retiring businessman. From plans to introduce standing flights, to making the decision to charge passengers for use of the on board toilets, his business model has, for a long time now been under close scrutiny by the national press. In fact, it seems that every move the businessman makes is thoroughly analysed by business editors as soon as they get wind of the ideas.
His latest plan is no different. Mr O’Leary has expressed an interest in buying almost a quarter stake in London Stansted airport, following BAA’s enforced sell after a competition ruling.
Ryanair are looking at purchasing a 24.9 per cent stake in the busy commercial property, buying in to a consortium that may include private equity groups. However, they may find themselves working in partnership with Manchester Airports Group, who are rumoured to be a prominent front runner in the bidding war.
Yet Mr O’Leary has voiced his displeasure at the cost involved in purchasing the stake in the airport, claiming that BAA have greatly overvalued the property. BAA cited £1.3 billion as the projected cost, yet Ryanair believe the actual value to be closer to £640 million.
Mr O’Leary said; “We want a stake of nothing more than 24.9 per cent in Stansted.
“It would cause regulatory problems if we were seen to have too large a share in an airport.”
A large stake in an airport would certainly add to the controversy surrounding Ryanair’s latest bid for rival Irish airline company Aer Lingus. Competition concerns were raised after Ryanair put in a bid of £649 million to take over the smaller company, which is its third bid in only five years. As a result, Europe’s competition regulator has launched an investigation into the takeover attempt, warning O’Leary that his company may have to make significant concessions in order to avoid yet another failure.
Ryanair already owns a 30 per cent stake in Aer Lingus, whose shareholders have been urged to refuse the latest bid by the board of directors for the airline. An initial bid was refused by the European Commission in 2007, while Ryanair themselves dropped a second bid in 2009.
However, Michael O’Leary is confident that, this time, his company will be successful in their takeover attempt after examining the routes on which both Aer Lingus and Ryanair operate.
He said; “We are confident that the remedies package will be enough to satisfy competition issues.
“There are forty six cross over routes and we will remedy all of them by getting airlines to come to Dublin and take them over.”
Ryanair is also currently in discussions with both British Airways and Virgin Atlantic regarding the possibility of opening routes and taking over some airport slots, according to a source within the company.
Do you think larger airlines should be allowed to bid for smaller carriers, or should they be limited in the number of routes they can monopolise? Do you believe that up and coming budget airlines such as Ryanair should be given the chance to buy into commercial property airports, or is this simply a method for drawing greater numbers of passengers to their airline, thus edging out the competition?