Ryanair/easyjet: the battle for Europe

Ryanair boss Michael O’leary is planning “a new push for European dominance”, beginning with a bid for all, or part, of Alitalia, said Robert Lea in The Times. The Irish carrier – already the Continent’s largest short-haul airliner – is reportedly one of around ten potential buyers staking out the Italian flag carrier, which went into administration in May, with s3bn of debt. “A combined Ryanair-Alitalia could speak for 50% of the Italian short-haul market,” and is bound to prompt competition concerns. But Italy is just one of several countries where the “ambitious” Irish outfit is “aiming to take advantage of struggling incumbent airlines”. It revealed this week that it is also keeping a beady eye on the fortunes of Air Berlin in Germany, and of Poland’s Lot.

Overall, Ryanair looks in good financial shape for expansion, said The Daily Telegraph: pre-tax profits rose by 55% in the last quarter, and the airline is sticking to its forecasts for the rest of the year. Yet shares fell by 4% following the update, echoing an even bigger 10% drop suffered by its fellow expansionist rival easyjet last week. Why is the City in such a funk?

Put it down to “altitude sickness”, said Lex in the Financial Times. “Frankly, Ryanair’s valuation already incorporates plenty of hope” – particularly given pressure from strapped consumers to cut fares. The financial hit has been partly cushioned by lower fuel prices, said Nils Pratley in The Guardian. But it’s also “easier for smaller rivals to buy new aircraft and add new routes” when fuel prices are low. “Both easyjet and Ryanair have been guilty of overhyping the thought that competitors can’t live with the pace they are setting.” Thankfully, for flyers, those rivals are “still capable of being irritating by surviving”.