General Industry

Ryanair Plans Binding Bid for Alitalia, Would Keep Carrier Whole

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Ryanair Plans Binding Bid for Alitalia, Would Keep Carrier Whole

Ryanair plans to bid for Alitalia, which has filed for bankruptcy, and will keep the Italian company intact if it’s successful, according to Chief Executive Officer Michael O’Leary.

Europe’s biggest discount airline is prepared to take over Alitalia’s long-haul arm as well as a short-haul unit that parallels its own operations, O’Leary said Thursday. Most of the Rome-based company’s fleet would be retained, together with pilots and engineering staff, and its name would also survive.

“Alitalia struggles to make money but it’s still a very good brand in Italy,” the CEO said. “The jets are all leased, so we would want those leases, but we would want the bankruptcy administrator to restructure them.”

Cuts would be focused on a 2,000-strong management layer that O’Leary said is inappropriate for a carrier with 23 million annual passengers. Ryanair, which attracted 117 million customers in 2016, has 120 equivalent managers, he said.

While O’Leary made clear Dublin-based Ryanair’s interest in Alitalia, the Irishman said the combined market share of the two airlines in Italy might pose an obstacle to a full takeover, which could be blocked by antitrust regulators. In that event it’s likely that Alitalia will be “broken up,” though Ryanair should still “get something out of it,” he said.

Mixed Fleet

Ryanair plans to submit a binding bid next month before a deadline for offers in October. A deal would give the company a mixed short-haul fleet, with Alitalia’s 70-odd Airbus SA A320-series planes joining more than 400 Boeing Co. 737s at the Irish company.

Alitalia’s long-haul operations, served by Airbus A330s and Boeing 777s, could expand under Ryanair, especially to North America, O’Leary said. Following its bankruptcy Alitalia should be freed from a penalty of about €200 million for adding more US routes that’s tied to its membership of the SkyTeam alliance alongside former shareholder Air France-KLM Group, he said.

Any solution that led to a breakup of Alitalia “would be a tremendous mistake,” Dario Franceschini, Italy’s minister for culture and tourism, said in a statement to Bloomberg.

O’Leary said last week that the “transparent” handling of Alitalia’s bankruptcy filing contrasts with the situation surrounding insolvent Air Berlin. Ryanair is interested in the German company too, but expects it to be handed to Deutsche Lufthansa in a local "carve up," he said.

News by Bloomberg - edited by Hospitality Ireland