Ryanair CEO predicts European consolidation into five groups

Ryanair CEO Michael O'Leary has predicted that Europe's airline industry is moving "inexorably" towards five airline groups -Lufthansa, IAG, Air France-KLM, Ryanair and easyJet - controlling 80% of the continent's traffic.

Other leading airline executives, including IAG's Willie Walsh, Lufthansa's Carsten Spohr and easyJet's Johan Lundgren have also talked of the likelihood of consolidation.

The exit of weaker airlines will be an important mechanism for increasing the concentration of Europe's airline market structure. Mergers and acquisitions are also likely to play a part. Mr O'Leary has even predicted specific deals that he expects to happen in the next five years. In his view, these include the purchase of Norwegian and TAP Air Portugal by IAG, the sale of Wizz Air to Lufthansa, and Alitalia's eventual acquisition by Air France-KLM.

The modestly increased pace of European consolidation over the past couple of years is the result of market exits and the acquisition of capacity from bankrupt airlines by large airline groups. However, the airlines that have left the market had only a small share of seats. Europe's airline industry is fragmented compared with North America's and will remain so even if the deals predicted by Mr O'Leary were to happen.