Ryanair is one step closer to taking over Cyprus Airways after getting through to the second round of bidding for the ailing flag carrier at the weekend. The Irish airline was one of 15 which submitted proposals to the Cypriot government in September to acquire and turn around Cyprus Airways, which in 2012 needed a €73 million state bailout after losing €56 million.
According to incoming finance chief Neil Sorahan, Ryanair was informally told on Friday that it was on a shortlist, meaning it is through to the second round of the process.
However, Mr Sorahan yesterday warned that it was “still a long shot”. Greek airline Aegean is seen as favourite to take over its fellow Mediterranean operator, thanks to the two nations’ political and cultural ties.
Ryanair is not offering any cash for the airline, but has told the Cypriots that if its bid succeeds, it will expand the airline from five aircraft and 700,000 passengers a year to 20 aircraft and three million passengers over five years.
The main attraction for Ryanair is the Cyprus Airways air operator’s certificate (AOC), which allows it to fly to Israel, Russia and countries around the eastern Mediterranean, where the Irish company is keen to expand.
Ryanair has also applied to the authorities for an AOC, although this is at an early stage. If it were to be granted, this would allow it to fly from there to the destinations in the region on which it has set its sights.
Ryanair already has a base on Paphos island. Chief executive Michael O'Leary indicated recently that it intended expanding its presence there considerably if its AOC application were to succeed.
The airline yesterday reported a 32 per cent increase in profit to €795 million for the six months to the end of September, the first half of its financial year. Passenger numbers rose 4 per cent to 51.3 million.
The company also reported that the numbers who flew with Ryanair in October rose 5 per cent on the same month last year, to 8.4 million. The carrier increased its full-year profit guidance to between €750-€770 million, from its previous range of €620-€650 million.
It plans to slash fares in coming months to boost market share – promising cuts of 3 to 5 per cent over the closing months of this year and 6 to 10 per cent between January and March 2015, the final quarter of its fiscal year.
Mr Sorahan, who is due to succeed Howard Millar as Ryanair's head of finance, indicated yesterday that it could go further if rivals were to respond with reductions of their own. "We have the capacity to cut fares by more than that. We have €4 billion in cash on our balance sheet," he said. However, he added that it had not seen any indication that its competitors were planning to cut their ticket prices.
Mr O’Leary said the airline had a bumper first half. In a statement, he acknowledged that it was partly due to the fact that Easter fell in the first quarter, but he added that the airline had a strong summer on the back of its strategy of raising forward bookings and improving customer service.
