Ryanair wants Alitalia ‘radically overhauled’ before moving on bid
EMBATTLED Italian airline Alitalia would need to be “radically overhauled” before Ryanair would get involved with the carrier, according to Ryanair chief financial officer Neil Sorahan.
Ryanair is one of about 10 airlines and groups that last week submitted non-binding agreements to Alitalia’s administrator to buy the ailing carrier, or parts of it. Other bidders include EasyJet, Aer Lingus owner IAG, Delta and Air France.
Ryanair has previously expressed an interest in taking control of Alitalia’s short-haul network. Alitalia collapsed into administration in May, with the Italian government giving it a €400m loan to enable it to continue trading as the administrator decides to sell the airline or liquidate it.
“The administrators have massive abilities to restructure and do an awful lot with this business, so I’m sure they’ll want to think very carefully about what their next steps are before they come back to various parties involved,” Mr Sorahan told the Irish Independent.
“We put a non-binding offer in. We would like to see the company radically overhauled before we’d get involved in it,” he added. “We’re the largest airline in Italy with just under 30pc of the market, and it would be wrong if we weren’t involved in the process.”
“There is a reason it (Alitalia) has lost money … but if you could get your hands on something that has the potential to be profitable. It’s interesting, but there’s a lot that needs to be done to get to that stage,” he added.
Mr Sorahan said he doesn’t expect an outcome from the bidding process until September at the earliest.
He was speaking as Ryanair released first-quarter results that CEO Michael O’Leary said were flattered by the timing of Easter, with profits after tax jumping 55pc to €397m. Revenue was 13pc higher at €1.31bn.
But shares in the airline slumped more than 4.6pc in early trading despite the profit figure being well ahead of the €366m that analysts had expected it to make in the period.
Investors were partly spooked by predictions from Mr Sorahan that Ryanair’s average fares could fall as much as 9pc in the current quarter as airlines continue to deal with a glut of capacity, particularly on routes to countries including Spain, Portugal and Italy.
Its passenger numbers rose 12pc to 35 million during the first quarter. The airline expects to carry 131 million in the full financial year.
Ryanair expects its average fares to decline 5pc in the first half of its financial year, and by 8pc in the second half.
The airline also repeated its warning that a failure to secure a post-Brexit bilateral air agreement between the UK and the EU by next year could result in Ryanair suspending services to the UK.
Mr Sorahan said bookings out of the UK remain strong, but that consumers there are “feeling the pinch” due to sterling weakness.
“There’s a lot of competitive prices,” he said of the UK market, due to extra capacity there.