Ryanair waiting in wings as Flybe expected to be carved up
Ryanair has been named as a possible significant beneficiary — though an unlikely outright buyer — from an expected sale of British regional airline Flybe.
Reports in the UK media have suggested Flybe is seeking a sale or a merger with a rival, although the airline is yet to confirm this. Its shares rocketed nearly 30% on the news.
The loss-making regional route operator recently issued a profit warning, citing fuel costs, weakening demand and currency woes as major headwinds.
Stobart Air — which operates the Aer Lingus Regional network and recently landed the contract to run British Airways’ UK regional routes, via the latter’s BA Cityflyer brand — has been linked afresh with a move for Flybe. A previous approach by Stobart was rejected by Flybe in March.
Flybe is likely to be looking for a trade buyer, according to Goodbody aviation analyst Mark Simpson. He said it would be unlikely to attract a big-name player as an outright buyer, but larger carriers such as Ryanair, British Airways and EasyJet are all likely to be interested in profitable individual parts of the Flybe business that could be disposed of by an eventual buyer.
Ryanair did not respond to requests for a comment on the matter. However, Mr Simpson said the airline would face less competition-related hurdles than EasyJet or British Airways if they were all to seek parts of Flybe in the event of a carve-up.
Likely to be of particular attraction to Ryanair, according to Mr Simpson, would be Flybe’s landing slots at Manchester, Birmingham, Edinburgh and Schiphol airports. Flybe has a third of the slots at Birmingham, 19% of those at Manchester, 18% at Edinburgh - where Ryanair has been building a presence to the detriment of its exposure to Glasgow — and 2% of landing area at Amsterdam.
Flybe’s slots at Heathrow are likely to appeal to British Airways, Mr Simpson said.
The European aviation sector has already seen some consolidation — with Ryanair buying Lauda and Lufthansa and EasyJet acquiring parts of Air Berlin — but more is expected as long as oil prices remain high putting pressure on smaller carriers’ fuel costs.
Flybe is also understood to be considering other options such as cost and capacity reductions.
Brexit-related uncertainty, a weaker British pound and rising fuel costs led the airline’s directors to conclude that a takeover was likely to be required to preserve its future, according to reports.
