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Ryanair is Europe's largest airline, the largest low-cost carrier, and one of the world's largest airlines as measured by international passengers carried. Ryanair's largest hub is at London Stansted Airport, with its second largest base at Dublin Airport. The carrier operates a comprehensive network of services across Europe, the Mediterranean and North Africa with a fleet of over 300 B737-800 aircraft.
Location of Ryanair main hub (London Stansted Airport)
Ryanair share price
LCCs will continue to evolve into hybrids of the original core model. CAPA and OAG consider Ryanair fits the LCC profile and it is included in our reporting on this basis. Please note: when reporting for an airline is changed from or to LCC the historical data is not affected and it can lead to a distortion in the current reported data. Contact us if you have any queries.
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Part 1 of this report on Greece reviewed the status of these key industries, which account together for over a fifth of the country's GDP and in many ways represent one of the key areas of hope for Greek employment and economic growth.
The other part of the equation is the ownership of the country's airports, still mostly in government ownership.
On 11-Jul-2015, the European Union delivered a new bailout offer to the Greek government; this included a requirement to sell down a range of government owned infrastructure, including its airports. This offer is still subject to ratification on both sides, but if finally agreed should stimulate considerable interest from investors.
As Part 1 described, passenger growth at several of these airports has been impressive over the past two years, generating some hopes for strong valuations. The Greek air travel market comprised 38.6 million passengers in 2014, an increase of 15% over 2013, as new airline capacity was added, largely by Aegean and Ryanair.
Greece aviation and tourism - Part 1: potentially major forces in supporting economic re-development
Greece has long been a tourism magnet for sun-hungry northern Europeans, quite aside from its remarkable historic attractions. Now, as the country's tottering economy seeks to recover from its near-Grexit experience - and to help stave off the almost inevitable next round of brinkmanship in a few months - aviation and tourism are core to employment and wider economic prospects.
In 2014, travel and tourism was expected to account for one in every five jobs in Greece, as well as accounting for 20% of the country's GDP. Clearly the health of this industry is a vital ingredient in any recovery. Moreover, around 15% of inward investment is in this sector.
The apparent inability of Greece to repay either its debts - or the debts it took on to service its original debts - makes predictions difficult. One substantial fear is that social unrest might upset the stability necessary for essential investment and the tourist trade.
Ryanair's customer refocus delivers 1Q load factor and 25% profit rises; Germany the next big target
Ryanair has continued its impressive growth with a 25% increase in net profit and a 15% increase in passenger numbers in 1Q of its FY2016. This is more evidence of the success of its 'Always Getting Better' customer service initiatives. Profit growth was helped by lower fuel prices, although the benefit was limited by fuel hedging at last year's higher prices driven in part by another jump in load factor. More significantly, a jump in load factor more than offset lower average fares to drive up revenue per seat.
With 35 aircraft deliveries in FY2016 and 50 in FY2017, Ryanair continues to add to its network. The coming winter will see it open bases in Berlin Schoenefeld and Gothenburg. It is also in talks with many other airports across Europe that are interested in the traffic growth that Ryanair can bring. The strength of its network is such that it can happily continue to serve former bases by serving them from other airports, as demonstrated by its recent decision to close its Copenhagen base.
Aer Lingus' FY2016 outlook strong as IAG's bid nears acceptance; new era to begin for the Irish flag
Aer Lingus suffered a slight fall in its 2Q2015 operating profit. Healthy revenue growth, driven by strong trading on the long-haul network more than offsetting a dip in short-haul revenue, was not enough to counterbalance cost increases. Currency movements inflated both revenue and cost, but the net impact was detrimental to the result.
Aer Lingus expects these currency effects to be less in 2H and says it is satisfied with forward bookings. It is prevented by stock exchange rules from issuing FY2015 profit guidance while under offer from IAG, but it says that it expects an improved operating performance for 3Q and for the full year.
Meanwhile, the IAG offer looks very close to being accepted by Aer Lingus. This could be its last set of results as an independent airline. As it continues to battle powerful local rival Ryanair, Aer Lingus can look forward to a new phase of its history as part of Europe's strongest legacy airline group.
Eastern/Central Europe offers significant opportunities to LCCs. The region's faster-growing, lower-wage economies are relatively under-penetrated by the low cost model, and by air travel in general, compared with Western Europe. Furthermore, outside Russia, Turkey and Greece, the region contains very few sizeable legacy airlines and even fewer in strong financial health.
Wizz Air and Ryanair, already established as the two leading airlines in Eastern/Central Europe (ex Russia, Turkey and Greece), look well placed to build further here. According to OAG data for the week of 13-Jul-2015, number one ranked Wizz Air is growing seat capacity by 25% year on year, while number two Ryanair's seat numbers in Eastern/Central Europe are up 22% from their level a year ago.
Wizz Air's recent aircraft order demonstrates its resolve to stay in pole position. However, breaking the region into its component markets, Ryanair often comes out ahead of Wizz Air in countries where they both compete. Whichever one of Europe's two lowest unit cost airlines can win the fight for cost leadership will likely be the long term winner in Eastern/Central Europe.
The Italian market continues in a state of flux. It looks like 2015 will join 2014 as a growth year, following contraction in 2012 and 2013. Alitalia has stabilised its total seat capacity after years of decline, but continues to lose market share to fast-growing rivals. Europe's three biggest LCCs - Ryanair, easyJet and Vueling - are pursuing what seems like relentless expansion across Italy, but Wizz Air is also building a presence.
Furthermore, the leading airlines in Italy continue to jostle for places in difference parts of the market. This is illustrated by easyJet's recent decision to close its Rome Fiumicino base from Apr-2016 and to redeploy aircraft through the expansion of bases at Milan Malpensa and Naples and at a new base at Venice Marco Polo.
Ryanair overtook Alitalia as the biggest airline in Italy by seats in 2013 and offers far more destinations. As it continues to improve customer service quality and to increase the proportion of primary airports in its pan-European network, Ryanair's position as market leader in Italy and the lowest cost producer in Europe will make it hard to beat.