How Do Malta Air And Laudamotion Fit Into Ryanair’s Plans?

Ryanair have been busy with acquisitions recently. With Laudamotion and Malta Air now under their wing, and a rebranding going on at Polish arm Ryanair Sun, Simple Flying asks, what’s really going on here?

Ryanair
What are Ryanair up to? Photo: Ronnie Macdonald via Flickr

Despite being the biggest low cost carrier in Europe, it seems it’s just never enough for Ryanair. The Irish low cost carrier has undergone a series of recent new acquisitions, expanding its reach, fleet and bases. From Austrian based Laudamotion to Maltese start up Malta Air, how do all these new investments fit into Ryanair’s plans, and what is it they are trying to do?

Why is Ryanair buying so many airlines?

The diversification of Ryanair isn’t a simple one to explain. Firstly, there’s Ryanair Sun, a Polish based arm of the company, which is getting ready to drop the Ryanair tag altogether. Set to rebrand as Buzz in the autumn, it’s a strange tactic to move away from the recognizable Ryanair brand.

Advertisement
Buzz Plane
The new branding will launch in the autumn. Photo: Ryanair

Malta Air was bought with nothing concrete in place at all. Although the airline had achieved it’s AOC, it had no planes, no routes and no passengers. When it starts to fly, it too will operate under its own livery and brand, with little to no visible affiliation with Ryanair.

Advertisement

And again Lauda, or Laudamotion as it is better known, is also a Ryanair company. Famously conceived by racing legend Niki Lauda, this purchase represents not only a diversification of brand but of aircraft too. With Lauda, Ryanair are getting their first taste of Airbus aircraft, and is even mulling an order of 100 A321s to add to its fleet.

So, what’s going on here, and what is O’Leary’s gameplan?

Advertisement

Hiding their brand

With these new Ryanair owned brands operating independently of the recognizable blue and yellow colors, it almost seems as if Ryanair is attempting to hide its brand. Rather than expand Ryanair itself into new markets, they seem to instead want to maintain separate, local entities which may be more successful in the native market.

O’Leary himself has even said that he wants to create an ‘IAG of low cost carriers’, and this is precisely what he is doing right now. Rather than have passengers suffer the dubious pleasure of flying a Ryanair flight, complete with in your face branding and outspoken chief exec, they’ll have the opportunity to choose an airline they are just more comfortable with.

Ryanair wizz
Ryanair would love to steal market share from Wizz. Photo: markyharky via Flickr

The Economist notes how, in German speaking countries, Ryanair has struggled to gain market share. Here, where loyalty to national carriers is stronger than elsewhere, Lauda holds a unique appeal that will get the locals flying. Similarly, Buzz with its snappy name and eye catching livery bears more than a passing resemblance to eastern European Wizz Air, a popular choice within the region and an airline which is snagging much of the low cost traffic at that end of Europe.

Tax purposes

The same story doesn’t really wash with Malta Air. The airline doesn’t exist for a start, so how could it have any local appeal? Well, in this particular case, it’s more of a move to make money by saving money than anything else.

Malta is something of a tax haven in Europe. While Ireland is a popular base with aircraft leasing companies for similar reasons, Malta is even better. Having a Maltese AOC means Ryanair can start transferring aircraft, employees and other parts of the business to that arm. In fat, they’ve already transferred a number of aircraft since the purchase was made.

Malta Air
Malta Air is likely a strategic purchase. Photo: Ryanair/Malta Air

According to BFMTV, 200 Ryanair employees will be under a Maltese contract, given time. Added to this, it is estimated that as many as 50 Ryanair planes will be registered under the Maltese AOC, although only 10 will serve the local market.

While Malta is certainly an important staging post in terms of accessing North African destinations, it seems this purchase was more about monetary motivation than anything else.

Brexit

The elephant in the room is what we British like to call the B word. With outposts in no less than four European countries (Ireland, Malta, Poland, Austria) Ryanair has the flexibility to deploy its fleet anywhere around the continent, without fear of negative consequences of Brexit.

O’Leary’s exit

Aside of the British EU exit, there’s another big goodbye on the horizon for Ryanair. Famed CEO Michael O’Leary has just started the first of a five year term as CEO of the newly formed Ryanair Group. That means his much less hands on with any one airline, instead working in an overseer type role across all the airlines in the group.

Michael O'Leary
O’Leary is on route to retirement. Photo: Ryanair

Should he steer the group to €2bn in profits or a share price of €21 by 2024, the Times reports that he would stand to earn €90m in shares. This would come on the cusp of his retirement, making this the largest severance package in Irish corporate history.

In a recent results presentation, Ryanair highlighted no less than 10 airlines who have recently failed, including WOW, Flybmi and others. They also pointed out that there are three carriers up for sale, including beleaguered UK operator Thomas Cook. O’Leary predicts that consolidation will continue and thinks that this will accelerate through winter 2019 if oil remains more than $70 a barrel.

Overall, he predicts an emergence of four to five airline groups in Europe, including Air France-KLM, Lufthansa and, of course, Ryanair Group. He believes these four or five groups will gradually swallow up smaller independent carriers such as Norwegian and Wizz.

His move to buy up struggling or failing airlines is, perhaps, evidence of Ryanair actively participating in consolidation; maybe even aiming to speed it up. By cherry picking the small fry in their hour of need, Ryanair are quietly ensuring that they are large and strong enough to weather the storm of European aviation’s streamlining.

Advertisement

1
Leave a Reply

1 Comment threads
0 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
1 Comment authors
newest oldest most voted
Alberto

Also don’t forget Ryanair UK. They only have one plane at the moment, but is ready to take over UK-nonEU and UK domestic services after Brexit.