Aegean Airlines' plans to merge with Olympic Air is reportedly expected to be blocked by the European Union on 26-Jan-2011 after the airlines failed to offer sufficient concessions to appease the EU regulator’s antitrust concerns (Bloomberg, 25-Jan-2011). An EU veto would be the first time the regulator has blocked a deal since it prevented Ryanair from proceeding with a hostile takeover bid for Aer Lingus in 2007.
Aegean Airlines and Olympic Air merger expected to be blocked by EU
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Aegean Airlines cuts capacity for first time since Olympic Air acquisition; 2016 margin falls
In 2017 the Aegean Airlines Group will make its first cut in seat capacity and fleet numbers since 2012. This follows three years of rapid expansion by the group since its Olympic Air acquisition in 2013. Olympic's all turboprop fleet focuses on the domestic market but also helps to feed Aegean's international network, particularly through its Athens hub. Cuts will focus on the domestic market.
Aegean will also make an important longer term fleet decision in 2017, or early 2018. The majority of its aircraft leases will need to be replaced between 2019 and 2023, and it is weighing the options. Aegean currently operates Airbus narrowbodies, but will consider the Boeing 737MAX in addition to the A320neo family.
Aegean's last capacity cut was in 2012, the end of a four year period of losses when Greece was in a deep multi year recession. Since then it has made healthy profits, but while profitable its operating margin fell in 2016 for the second successive year. Greece has experienced rapid capacity growth from LCCs, led by Ryanair. A decline in Aegean's unit revenue over three years has now prompted a pause for what its Executive Vice Chairman has called "consolidation and readjustment".
Ukraine: traffic recovery prompts Ryanair to join Wizz Air in LCC growth. Ukraine Int'l also expands
Two announcements by leading LCCs in quick succession may mark a significant development in Ukraine's aviation market. One came on 13-Mar-2016 from Wizz Air, the largest low cost airline in Eastern/Central Europe; the other on 15-Mar-2016 from Ryanair, the largest LCC (and largest airline) in all Europe.
Both expect opportunity in Ukraine's very low levels of air travel and low LCC seat share. Wizz Air, already Ukraine's leading low cost airline, will add four more new routes in summer 2017, to the four previously announced. Ryanair will enter Ukraine with 11 routes, adding competitive tension to the emerging low fares market there. The battle between the two for supremacy in Eastern/Central Europe opens up a new front.
Meanwhile, Ukraine's air traffic levels are enjoying a recovery from the slump of 2014 and 2015 caused by major geopolitical disruption and a severe recession. Passenger numbers jumped 21% in 2016.
The country's flag carrier and biggest airline, Ukraine International Airlines, has taken part in the traffic growth, but will need to ensure it can do this profitably after a period of losses. Risks remain, but the conditions are in place for further growth in Ukraine's air traffic.