History ATR-42 in 1991 Ryanair has grown since its establishment in 1985 from a small airline flying a short hop from Waterford to London into one of Europe’s largest carriers. After the rapidly growing airline was taken public in 1997, the money raised was used to expand the airline into a pan-European carrier. Revenues have risen from €231 million in 1998, to €1843 million in 2003 and €3013 million in 2010. Similarly net profits have increased from €48 million to €339 million over the same period. [3] [edit]Early years
Ryanair was founded in 1985 by Christopher Ryan, Liam Lonergan (owner of Irish travel agent Club Travel) and Irish businessman Tony Ryan (after whom the company is named), founder of Guinness Peat Aviation and father of Cathal Ryan and Declan. [4] The airline began with a 14-seat Embraer Bandeirante turboprop aircraft, flying between Waterford and Gatwick Airport[5] with the aim of breaking the duopoly on London-Republic of Ireland flights at that time, held by British Airways and Aer Lingus. [6] Embraer EMB 110 Bandeirante in 1988
In 1986, the company added a second route – flying Dublin–Luton International Airport in direct competition with the Aer Lingus / British Airways duopoly for the first time. Under partial EU deregulation, airlines could begin new international intra-EU services, as long as at least one of the two governments gave approval (the so-called “double-disapproval” regime). The Irish government at the time refused its approval, in order to protect Aer Lingus, but Britain, under Margaret Thatcher’s pro-free-market Conservative government, approved the service.
With two routes and two planes, the fledgling airline carried 82,000 passengers in one year. Passenger numbers continued to increase, but the airline generally ran at a loss and, by 1991, was in need of restructuring. Michael O’Leary was charged with the task of making the airline profitable. O’Leary quickly decided that the key to low fares was to implement quick turn-around times for aircraft, “no frills” and no business class, as well as operating a single model of aircraft. 7] In 1987, a Short Sunderland was operated by Ryanair. [8] O’Leary returned from a visit to Southwest Airlines convinced that Ryanair could make huge inroads into the European air market, at that time dominated by national carriers, which were subsidised to various degrees by their parent countries. He competed with the major airlines by providing a “no-frills”, low-cost service. Flights were scheduled into regional airports, which offered lower landing and handling charges than larger established international airports.
O’Leary as Chief Executive took part in a publicity stunt, where he helped out with baggage handling on Ryanair flights at Dublin airport. By 1995, after the consistent pursuit of its low-cost business model, Ryanair celebrated its 10th birthday by carrying 2. 25 million passengers. [9] [edit]1992–1999 Ryanair operated BAC 1-11 series 500 aircraft between 1988 and 1993 In 1992, the European Union’s (EU) deregulation of the air industry in Europe gave carriers from one EU country the right to operate scheduled services between other EU states and represented a major opportunity for Ryanair. 10]
After a successful flotation on the Dublin Stock Exchange and the NASDAQ Stock exchanges, the airline launched services to Stockholm, Oslo (Sandefjord Airport, Torp, 110 km south of Oslo), Paris-Beauvais and Charleroi near Brussels. [11] In 1998, flush with new capital, the airline placed a massive US$2 billion order for 45 new Boeing 737-800 series aircraft. Boeing 737-200 landing at Bristol Airport, the type operated by the company through the 1990s and until 2005. [edit]2000–2006 The airline launched its website in 2000, with online booking initially said to be a small and unimportant part of the software supporting the site.
Increasingly the online booking contributed to the aim of cutting flight prices by selling direct to passengers and excluding the costs imposed by travel agents. Within a year the website was handling three-quarters of all bookings. Today it is only possible to book seats via the website or via the “Ryanair direct” call-centre. No other possibilities are officially offered. [12] Ryanair launched a new base of operation in Charleroi Airport in 2001 The airport was relabelled as “Brussels South”, even though it is 30 miles distant from the Belgian capital.
Later that year, the airline ordered 155 new Boeing 737-800 series aircraft from Boeing at what was believed to be a substantial discount, (taking full advantage of the downturn in airplane orders after the slump in air travel following the September 2001 aircraft attacks in the United States) to be delivered over eight years from 2002 to 2010. Approximately 100 of these aircraft had been delivered by the end of 2005, although there were slight delays in late 2005 caused by production disruptions arising from a Boeing machinists’ strike. 13]
Boeing 737-800 Ryanair cabin with advertising on overhead lockers and safety cards on seatbacks Ryanair Boeing 737-800s at Frankfurt-Hahn Airport Ryanair flight taxiing at Orio al Serio Airport In 2003, Ryanair announced the order of a further 100 new Boeing 737-800 series aircraft. In April 2003, Ryanair acquired its ailing competitor Buzz from KLM. [14] By the end of 2003, the airline flew 127 routes, of which 60 had opened in the previous 12 months. By mid 2004 the airline was operating from a total of 11 bases across Europe.
During 2004, Michael O’Leary warned of a “bloodbath” during the winter from which only two or three low-cost airlines would emerge, the expectation being that these would be Ryanair and EasyJet. [15] A modest loss of €3. 3 million in the second quarter of 2004 was the airline’s first recorded loss for 15 years. However, the airline recovered posting profits soon after. The enlargement of the European Union on 1 May 2004 opened the way to more new routes as Ryanair and other budget airlines tapped the markets of the EU accession countries. 16]
In February 2005, Ryanair announced an order for a further 70 Boeing 737-800 aircraft, along with an option for a further 70. This was expected at the time to allow Ryanair to increase passenger numbers from the 34 million expected in 2005 to 70 million in 2011. Some of these aircraft would be deployed at Ryanair’s 12 European bases, others to 10 new bases the company intended to establish over the next seven years. [17]
In June 2006, the company announced that in the quarter ending 30 June 2006, its average ields were 13% higher than the same quarter of the previous year[18] and its passenger numbers were up by 25% to 10. 7 million, although year-on-year comparison was difficult, because of the movement of Easter from first quarter 2005 to second quarter 2006. Net profits (€115. 7 m) increased by 80% over the same quarter in 2005. Management indicated that the level of growth may not be sustained for the remainder of that year, despite adding 27 new aircraft and opening new routes. [19] Ryanair’s passenger numbers have grown by up to 25% a year for most of the last decade.
Carrying under 700,000 annually in its early years, passenger figures grew to 21. 4 million in 2003. The rapid addition of new routes and new bases has enabled this growth in passenger numbers and made Ryanair among the largest carriers on European routes. In August 2004, the airline carried 20% more passengers within Europe than British Airways. [20] Ryanair posted record half-year profits of €329 million for the six months ending 30 September 2006. Over the same period, passenger traffic grew by more than a fifth to 22. 1 million passengers and revenues rose by a third to €1. 56 billion. [21]
Dispatches programme On 13 February 2006, Britain’s Channel 4 broadcast a documentary as part of its Dispatches series, “Ryanair caught napping”. The documentary criticised Ryanair’s training policies, security procedures and aircraft hygiene, and highlighted poor staff morale. Ryanair denied the allegations[22] and claimed that promotional materials, in particular a photograph of a stewardess sleeping, had been faked by Dispatches. [23]
Aer Lingus takeover bid Boeing 737-800 shortly after takeoff On 5 October 2006, Ryanair launched a €1. 8 billion (? 1bn; $1. 9bn) bid to buy fellow Irish carrier Aer Lingus. Ryanair CEO Michael O’Leary said the move was a “unique opportunity” to form an Irish airline. The “new” airline would carry over 50 million passengers a year. [24] Aer Lingus floated on the Irish Stock Exchange on 2 October 2006, following a decision by the Irish government to sell more than 50% of its 85. 1% share in the company. Workers retained a 15% stake. The shares began trading at €2. 20 each, valuing the firm at €1. 13bn. Ryanair said it had bought a 16% stake in Aer Lingus and was offering €2. 0 per share for remaining shares. [25]
On the same day, Aer Lingus rejected Ryanair’s takeover bid, saying the bid was contradictory. [26] With a total of 47% of Aer Lingus in the hands of the Irish Government, the employee share ownership trust and other entities that publicly rejected the bid and a further 4% in the hands of the Bank of Ireland and AIB, who were considered highly unlikely to sell, the takeover bid was effectively dead. The Ryanair website described the attempted takeover as, “In October… we make an all cash offer for the small regional airline, Aer Lingus”. [27]
On 30 April, the Irish Government announced its intention to sell 25% of its stake in Aer Lingus. Having sold 23.5% of its shareholding by August 2013 at a price of €2.20 per share, it now holds 12% of Aer Lingus.
Ryanair increased their bid for Aer Lingus and made a €1.48 billion offer in the hope of securing a dominant shareholding. The Irish government confirmed that it would not sell its 25% stake for less than €2.50 per share and was committed to remaining an Aer Lingus shareholder until at least 2015, when the Commission on Taxation recommended that all public transport should be privatised. The Ryanair bid was rejected on the basis that €2.20 per share had already been rejected by shareholders and that the Aer Lingus Board believed its own business plan to deliver better shareholder value than a Ryanair takeover would achieve.
Aer Lingus operates over 90 routes out of Ireland, serving over 20 destinations in the UK, France, Spain, Portugal, Germany, Italy and Cyprus.
On 20 January 2014 Ryanair announced it had made two proposals to Aer Lingus on how they might co-operate to save €50m per annum in costs. The first was for Aer Lingus to sell its slots at London Gatwick airport which are mostly used for services between Ireland and the UK so that both airlines could improve their profitability by avoiding duplication of routes flying from London Stansted Airport where 80% of slots are operated by the two airlines. This proposal was rejected outright by Aer Lingus who said that it undervalues Gatwick slots.