Ryanair Thinks easyJet And Wizz Could Merge To Make A New Airline Group

Consolidation in European aviation is seen by many to be the only way forward. Too many airlines have too little of the market share, in stark contrast to markets such as the US. Ryanair’s CEO Michael O’Leary talked about consolidation this week, saying that he believes Wizz and easyJet could team up to create Europe’s fifth major airline group.

Ryanair
The Ryanair boss thinks easyJet and Wizz could merge in the future. Photo: Getty Images

Consolidation is inevitable

The shape of European aviation post-COVID is something that is highly debated around the continent right now. Many aviation experts believe the market to be over-ripe for consolidation, with far too many airlines for the demand available. This is a notion that is set to become exacerbated by lower than usual demand, as it is predicted to be for some years.

It’s not often we see Carsten Spohr, CEO of Lufthansa, agreeing with Michael O’Leary, CEO at Ryanair, but on this issue, it’s happened. During an interview for the World Aviation Festival, Sphor said,

“I see way too many players in Europe, and I’m sure that some of these will not survive this unique climate, or whatever comes after.”

Lufthansa, Loss, 1 million euros
Carsten Spohr thinks there are too many airlines in Europe. Photo: Oliver Roesler via Lufthansa

It’s an opinion that is shared by many European airline CEOs. Pieter Elbers, CEO at KLM, has led one of the few large airline mergers to happen in Europe in recent years, guiding KLM through its consolidation with Air France. He, too, thinks that the crisis could spur more mergers, saying at a recent Eurocontrol Hardtalk session,

“Well, every crisis has led eventually to more consolidation.”

So if Europe is staring down the barrel of a new consolidation gun, which airlines can we expect to stay, and which ones could be at risk of becoming absorbed elsewhere? One airline CEO thinks he has the answer.

Air France-KLM
Air France-KLM is one of the only major mergers in Europe to date. Photo: Air France-KLM

O’Leary sees an LCC consolidation

For some time, Michael O’Leary has been predicting some level of consolidation in Europe. Even before the COVID crisis, he said he saw a European future with five main groups of airlines taking shape, but who would the five be? Clearly, there is already Lufthansa, IAG, Air France-KLM, and, of course, the Ryanair group. So who would be the fifth?

Speaking at this week’s Eurocontrol Hardtalk session, O’Leary suggested that it could, in fact, be a second LCC consortium that takes the fifth position. He said,

“I think there will be a fifth. I think the jury is out at the moment as to whether easyJet survives longer term as an independent airline, given its very high cost base, or whether Wizz overtakes it or maybe Wizz merges with easyJet and forms a fifth competitor.”

Wizz Air
There are some synergies between Wizz and easyJet. Photo: Getty Images

Wizz and easyJet aren’t natural partners, but there are some synergies between the two airlines. For a start, they are both Airbus only airlines, which would make a fleet amalgamation an easy thing to absorb. Pooling resources would give the consolidated airline a fleet of over 300 aircraft, taking them to a similar sort of size to Ryanair.

Following the USA

O’Leary predicts that we will, eventually, have an aviation space that is far more similar to that of the US. Over there, the four big carriers (Delta, United, American, and Southwest) account for around 90% of the market share. In Europe right now, the 10 or so largest carriers have just 50% of the market.

To get to where the US is now, there could be even deeper consolidation than what is predicted already. O’Leary suggested that a new Wizz-easyJet partnership could even then be merged into one of the legacy carriers. He said,

“I suspect it may well be some kind of amalgamation between Wizz and easyJet. Maybe Wizz and easyJet then merge with a Lufthansa or an Air France as well. Because I think, like the States, there will be three or four large legacy connecting carriers and one large low fare airline.”

Southwest layoffs
O’Leary sees an opportunity to become the Southwest of Europe. Photo: Vincenzo Pace | JFKJets.com

It’s an interesting scenario and one that could make sense. Legacy airlines have traditionally struggled to create their own low-cost carriers. The failures of airlines like Joon, Little Red, and Germanwings are testament to this. Having a ready-made low-cost feeder airline could be something positive for legacy carriers in the future.

Whether this prediction comes true remains to be seen. Whatever happens with the competing airlines, O’Leary remains bullish on Ryanair maintaining more than its fair share of the market. He said,

“Wizz and easyJet are not and will not be able to compete with Ryanair’s cost base or with our fares. They accept that at the moment anyway. It’s why they try to avoid competing with us and it’s why they’re all desperate to get slots at constricted airports where we don’t operate.”

20 Shares: