Passengers could be taking
budget flights between the US and Europe on a Ryanair-backed airline in
less than three years, the low-cost carrier's chief executive claimed
yesterday.
Michael O'Leary said plans to launch a no-frills
transatlantic service had been bolstered by an industry downturn that
could slash the cost of long-haul aircraft as rivals go bust or orders
are cancelled.
The carrier would operate from up to nine bases
on each side of the Atlantic, with Stansted, Frankfurt-Hahn and
Rome-Fiumicino among the candidates for European hubs. Islip airport on
Long Island is mooted as a New York base.
O'Leary said the
airline could be launched 18 months after acquiring a new fleet next
year. "There may be an opportunity to pick up cheap long-haul aircraft
next year, in which case we might launch a low-cost, long-haul
programme in two-and-a-half years," O'Leary said.
He added
Ryanair would be "distinctly separate" from the new carrier, which will
attempt to make a better fist of the low-cost transatlantic market than
Zoom, the Canadian-British carrier that fell into administration in
August. O'Leary also ruled himself out of running the new business, but
said he might join other Ryanair investors such as Prudential and
private equity firm TPG in backing the venture.
"We want to bring people on board who have done well out of Ryanair," he said.
The
airline would expect to operate a fleet of new aircraft because it
would pick up orders from Boeing and Airbus that had been cancelled by
bankrupt or financially struggling carriers, he added.
One
banking source said: "Airlines are constantly moving around delivery
positions at the moment. O'Leary could get a long-haul airplane within
six months."
O'Leary squeezed significant discounts from Boeing
in the last industry downturn, when he placed a significant order to
expand his fleet.
However, analysts warned that he would
struggle to elbow his way into the order book for the Airbus A380 and
the Boeing 787 Dreamliner, the most advanced long-haul jets on the
market, because delivery delays have created a significant backlog.
Nonetheless,
O'Leary expects the industry downturn to reduce the cost of long-haul
aircraft that retail at between $170m (£97.1m) and $280m.
Andrew
Lobbenberg, analyst at Royal Bank of Scotland, warned that cheap fares
between Europe and the US were available on traditional carriers such
as British Airways and Air France-KLM, part-subsidised by the steep
ticket prices levied on business customers.
"Long-haul fares
are often quite cheap in economy - in part because they are subsidised
by people in the front [of the aircraft]. It's not going to get
consumers anything like as excited as low-cost short-haul," said
Lobbenberg.
O'Leary is also expected to offer a business-class
cabin with flat beds at a lower cost than BA or Virgin Atlantic. The
Ryanair boss added that he expected at least one British airline and
two continental carriers to go bust within weeks as any benefit from
falling fuel costs will come too late to save the least profitable
businesses.
He said 400 staff at Ryanair's Stansted airport
base would have to take one week of unpaid leave over the winter to
conserve costs, while senior management would take a pay cut of at
least 10% this year. Ryanair expects to break even in this financial
year - wiping out last year's profits of €439m (£341m) - if oil remains
at $100 a barrel or less.
BA confirmed yesterday that 135 jobs
were under threat in Glasgow. The airline is planning to scrap its
cabin crew base in the city and has given staff the option of voluntary
redundancy or relocation to Heathrow.
Its chief executive,
Willie Walsh, and the Scottish first minister, Alex Salmond, discussed
the plan yesterday, which follows the offer of voluntary redundancy
terms to 1,400 BA managers last month. Those senior staff, who work in
all parts of the business, were set a deadline of today to respond to
the redundancy offer.
