Unhappy landings ahead

Nov 4 2008 by Iain Laing, The Journal

THE recession could lead to just four European airlines surviving, according to the controversial boss of budget carrier Ryanair.

As many as five to six European airlines could go bankrupt between now and Christmas, said Ryanair chief executive Michael O’Leary, who forecast that eventually British Airways, German carrier Lufthansa, Air France and Ryanair will survive.

Mr O’Leary said that Europe “needed a recession” as an economic downturn gets rid of loss-making airlines and makes purchasing aircraft cheaper.

He also held out the hope of a new transatlantic low-cost operation within about two to three years with economy fares of just £10.

But he stressed this would not be operated by Ryanair and would be a separate company.

Mr O’Leary was speaking in London as Ryanair reported a 47% drop in half-year profits of £170m for the six months to September 30.

The Irish carrier said it expected to make losses over the next six months but said that average fares would dip by between 15% and 20%. Mr O’Leary said Ryanair had completed a “remarkable performance” over the last few months and that passenger numbers were up 18% in October 2008, compared with October 2007.

He said: “We need a recession. We have had 10 years of growth. A recession gets rid of crappy loss-making airlines and it means we can buy aircraft more cheaply.

“We think interest rates should stay high and politicians should let the economy right itself normally.”

He said he thought the recession would be “deep and dark” and could last for 18 months. Asked about a low-cost transatlantic operation, Mr O’Leary said that it could come about if Ryanair was able to buy around 50-60 long-haul aircraft.

He went on: “We would not have any links with the company that would run this apart from the fact that we would envisage flights being made across the Atlantic from some of our European bases. We are not going to be a transatlantic airline ourselves. We never will.”