Monday, October 09, 2006

What's with Ryanair?

You really have to wonder at Ryanair's move to take over Aer Lingus. Richard Delevan reports Michael O'Leary (via Slugger) as being somewhat cagey about when he (or others) came up with the move, suggesting that he doesn't remember whose idea it was but that they came up with it "only a week or two ago."

O'Leary's less-than-enthusiastic response may be rooted in the 'investor day' (pdf) Ryanair held on the 29th of September. Seemingly, Ryanair executives didn't mention the Aer Lingus idea then, much to the subsequent irritation of shareholders. Buying Aer Lingus would involve a major strategic shift even if the two companies were notionally separate, given Aer Lingus's long-haul business. It would also hit Ryanair's cost-base since it would both involve them taking on the costs of maintaining an Airbus fleet and - perhaps - being in a weaker negotiating position with their own pilots.

On top of all that, the oft repeated observation1 that Ryanair and Aer Lingus only compete on 17 routes is little more than spin. As the FT reports,2 Ryanair's rivals point out that some 62% of Aer Lingus's European destinations are also destinations for Ryanair, even if both airlines fly into different airports. The 17 routes claim assumes that we don't think that an airline flying into (God help us) Charleroi is competing with an airline flying into Zaventem, despite the fact that they both serve Brussels.

Well thought out? I doubt it.

1 Here from the horse's mouth (pdf). For some press-release copy and paste jobs, see here, here, here, here, here and here.

2 MSNBC has very kindly posted this article too.

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