Ryanair to make nonbinding Cyprus Airways bid Friday
Ryanair Holdings PLC will make a nonbinding offer for a stake in Cyprus Airways on Friday as Europe's biggest budget airline explores growth options.
Ryanair already has held several discussions with the government of Cyprus, which owns 93.7 percent of the carrier and is seeking investors. A decision on whether to make a binding offer would likely come early next year after a period of due diligence, said Kenny Jacobs, chief marketing officer for the Dublin-based carrier.
"It is an interesting part of Europe that is badly served," Jacobs said. "We would bring a lot of growth."
The deal would be only Ryanair's second airline acquisition after it purchased discount carrier Buzz more than a decade ago. Ryanair Chief Executive Michael O'Leary in the past has said he prefers to let airlines fail and move in afterward to satisfy unmet demand rather than deal with the integration challenges of a purchase.
"You can't always fulfill demand organically," Jacobs said. A potential deal would provide additional aircraft, of which Ryanair has a shortage, he said.
Cyprus Airways operates Airbus Group NV A320 single-aisle jets, whereas Ryanair is a big customer of Boeing and its 737s. The carrier will start taking delivery of the first of 180 new 737s from next year under a deal made in 2013.
The Cyprus offer would come as Ryanair is undergoing a broader transformation of its business in the face of strong competition from rivals such as easyJet. The Dublin-based airline, known for a pricing system in which passengers pay for every item, on Wednesday unveiled a business package starting at £69.99 ($116) that would bundle the ticket with fast-track service at airports, premium seating and other amenities.
Jacobs said other efforts are in the works to lure business travelers after Ryanair agreed last year to accept American Express credit cards used by many such passengers. As part of the push, the airline is considering providing passengers access to in-city business facilities that are like airport lounges, he said.
"We have done a big listening exercise," Jacobs said.
Ryanair also is expanding services to destinations favored by business travelers who typically are willing to pay higher fares. In announcing some of its summer flight plans for next year, Ryanair said it would boost service from London Stansted to Cologne, Germany, and Edinburgh, Scotland, and from Dublin to Brussels. The move comes amid a 10 percent increase in flights at both bases.
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