MILANO – Ryanair is looking forward to the take-off of Italia Trasporti Aereo instead of Alitalia. But he thinks that the handover cannot take place at no cost to the public newco since it starts operations using the assets of an Alitalia which, according to the European Commission, has received illegal state aid. For this he intends to appeal to the EU Court against the green light of Ita by Brussels. what he anticipates to Corriere della Sera in a long interview in Milan Michael O’Leary, CEO of the Ryanair group which includes, in addition to the Irish low cost giant, also the Maltese Malta Air and Lauda and the Polish Buzz. In the Lombard capital O’Leary has announced nine new routes in the coming months, five from Bergamo-Orio al Serio and four from Milan Malpensa, plus another five from the airports of Rome (Fiumicino and Ciampino).
In the winter season 2021-22 Ryanair will operate over 2,100 routes in Europe and plans to return to pre-Covid levels as early as next summer in Milan Malpensa and Bergamo-Orio al Serio. Without municipal surcharge we could base another 49 planes and reach 60 million passengers, says O’Leary, referring to the 6.5 euros paid for each departing traveler (7.5 euros from the airports of the capital, ed). Ryanair has long been the first carrier in Italy for traffic. Many people will take their summer holidays again in Europe in 2022, predicts the CEO. Italy has the best product and the best airports in Spain, Greece and Portugal to welcome tourists. In October, the low cost company will also announce the name of its country manager in Italy. We have received 3,000 job applications so far, he says.
How was the summer as a whole?
We have reached -15% in 2019, in short, we have approached the values before the pandemic. In the winter season we plan to put the same pre-Covid seats on sale, but we expect a lower fill rate, around 90%, and 10 million passengers boarded per month until December.
And in Italy?
The recovery really took place in July: 75% of traffic was made up of international flows and 25% of national ones. But this winter we will grow on the domestic side also because the new Alitalia will be smaller. I think we will go towards 60% international and 40% national. We are building the domestic network with more than one hundred routes.
Will you participate in the tender for the Alitalia brand?
For you have made a thought …
Yes, but only as a nuisance, to try to make Ita pay more to take over the brand.
And why won’t you participate?
We are big and famous in Italy, we don’t need that name. Of course, Alitalia is one of the most famous brands in Italy, but it has always been a company of m … But now we can’t wait for the handover between Alitalia and Ita to take place as quickly as possible. At Ryanair we are committed to returning to pre-Covid values and who knows maybe we have become older and more mature.
You seem almost fed up with the Alitalia dossier.
Everyone is, everyone wants to see the end of this path. And I’d like to see Ita succeed.
Italy needs capacity (supply of seats, ed). If Alitalia-Ita failed, we would not immediately have the planes needed to fill the void left by the Italian carrier.
Will you appeal against the European ok to the Ita project?
No. To appeal to the fact that the newco will take off without taking on anything of the 1.3 billion euros of state loans illegally given to Alitalia (in 2017 and 2019, ed): it is not fair that the transfer of assets to Ita should take place without liabilities because this would be further unfair competition.
So, if I understand correctly, do you think Ita must repay part of that loan given to Alitalia?
Yes, what we think.
Are you convinced by the industrial plan of Ita?
Of course it convinces me! Their business plan aims to finish in the red, exactly as Alitalia has done for 75 years now: they will continue the unbeaten record of losing money. The challenge for Ita is difficult: they are required to take Alitalia employees, they will try to pay them less, but the unions will not allow them, they will have the same high operating costs in airports, the usual political interference.
Carrier fares are now very low: when will they rise?
I think already from next Easter. More and more people will fly back into Europe, especially families. Bookings next summer will be better than pre-Covid and the rates will also be higher.
In all of this, Ryanair has to contend with a strong competitor: Wizz Air.
But how do they manage to be our main competitor? They are so small !.
For they are expanding in Europe.
They carried 25 million passengers before Covid (actually 39.8 million, ed), we over 150 million. Over the next five years we will take on another 210 aircraft in the fleet, they will grow by 60. Our rivals are Iberia, Ita-Alitalia, Lufthansa. Wizz Air moves in Eastern Europe, expands a little west of the continent, expands to Dubai, Kazakhstan, Azerbaijan: in short, they are looking for markets where they do not have to compete with Ryanair because where they deal with us – as in Italy – they are forced to reduce the offer because they cannot do better than our rates.
EasyJet history now. It is no longer growing, it has canceled the deliveries of most of the aircraft ordered. Their business model is in trouble now because they are strong in a few airports like London Gatwick, Paris, Switzerland and Malpensa: they want to stay in airports with few free slots so they don’t have to compete with other low cost ones.
Do you think we will see mergers or acquisitions even among the low cost ones?
I think it’s inevitable in the next five years.
Wizz Air says it has lower operating costs than you.
Not so. If you look at their numbers, their costs – excluding fuel costs – are 40% higher than ours.
But they have a greater share of ancillary revenues (the ancillary costs for hold baggage, the choice of seat, priority boarding, ed) on the average ticket paid: it now goes to 60-65%.
And I reply that this means that we have more room for growth. And then there is an accounting problem: we put the extra baggage in the basic rate, they under the heading “ancillaries”. In any case, we beat them on every front, even in the recovery of traffic. Besides, let me tell you, Ryanair also has a better looking CEO.
You said a few years ago that we will reach a point where the base rate will be zero euros – in short, we will fly for free – and that the gains will be made on ancillary costs. Do you still think so?
S. The goal is to reduce the base rate year after year, also cutting operating costs.
Is there room for new ancillaries?
There is always space. We proceed by trial and error, try this or that and see how it goes. Every couple of years there is something new to charge. Before we didn’t ask for extra money to board the trolley or to choose the seat, now they are two of our main revenue items. But every time we have introduced an extra, we have reduced the base rate.
At Boeing they didn’t like your public release: you said you won’t buy 230 of their 737 Max 10s because they are too expensive.
I don’t think they should be resentful because the truth: they wanted to sell us the 737 Max 10s at a high price, we said “okay, negotiations end here” and politely pointed out that Boeing has a too optimistic view of the market since they have hundreds of undelivered and parked aircraft, particularly in Seattle, while some of their customers – such as Delta Air Lines and Jet2 – have signed orders with Airbus. I have no idea what’s on his mind.
But it is really unlikely that Ryanair will change its fleet from almost all Boeing to Airbus.
Look, we would switch to Airbus right away if they sold us the A320s and A321s at a price 5% lower than Boeing’s offer for its jets. We have 25 Airbuses in Lauda, 450 Boeing 737s in Ryanair, but if Airbus were cheaper we would buy their aircraft. Historically for Boeing it has been cheaper for us. Also because Airbus has bet on easyJet some time ago, obviously wrong move.
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