As Europe scrimps, budget airline Ryanair soars
Europeans may be tightening their belts, but they're still flying Ryanair, whose profits were up in the first half of 2012. And the airline is eying expansion in Eastern Europe, Africa, and even the US.
Spartan, garishly colored cabin interiors, seats stripped of pockets, a seemingly constant bombardment of mid-air retail offerings, and a cheesy automated trumpet fanfare that announces “yet another on-time arrival.”Skip to next paragraph
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It could only be Ryanair, the budget airline European travelers love to grumble about while readily snapping up its fares. The pattern has transformed the nature of travel on the continent and forced more upmarket rivals, including British Airways and Lufthansa, to mimic its “no frills” model.
While companies from a range of sectors across the continent continue to struggle against the headwinds of deep austerity, better than expected results released this week by the Dublin-based carrier for the first half of this year underlined the apparent resilience of one of Europe’s most extraordinary business success stories. Despite operating in cash-strapped times where many Europeans are cutting back on the pre-austerity habit of taking multiple weekend city vacations, it posted a 10 percent rise in net profit and 15 percent rise in revenues to €3.1 billion (almost $4 billion).
The announcement Monday also came with the confirmation that Ryanair is adding nine new routes from English airports in a move slated to create 1,000 new jobs next year.
No transatlantic expansion... yet
While the airline continues to expand in Europe, where it carried 48 million passengers in the year up to September, don’t expect Ryanair to turn its attention to the US for the moment.
“I think it's unlikely we will see a Ryanair transatlantic [service] for the next three or four years,” the airline’s famously bombastic chief executive, Michael O’Leary, told British broadcaster Sky News. Mr. O’Leary cited the reason as being a delay in the delivery of new, long haul aircraft.
However, many experts who have long been fascinated by the story of Ryanair – a 27-year-old start-up that was losing large sums of money as recently as the 1980s, until O’Leary turned it around by copying the low-cost characteristics of Dallas-based Southwest – suggest that future long-haul ambitions may be a factor in the company’s ongoing interest in buying its Irish rival Aer Lingus.
“If they do acquire Aer Lingus, they have this ready-made way of trying to launch a budget transatlantic services,” says Eleanor O’Higgins of the School of Business at University College Dublin, who has written a series of case studies on Ryanair.
Now in the midst of its third attempt to take over Aer Lingus, Ryanair this week cranked up its efforts by submitting proposals designed to alleviate European Commission concerns about competition being stifled.