Is Ryanair Going to Buy Alitalia?

Sep 15, 2017

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Ryanair, the low-cost carrier based in Ireland, is making more noise about taking over Italy’s bankrupt flag carrier Alitalia. Michael O’Leary, the chief executive of Ryanair, told Reuters on Thursday that his airline was in the process of finalizing a binding offer to purchase the beleaguered Italian airline in its entirety, including its long-haul operations.

The acquisition would add to what is already Europe’s largest carrier by scheduled passenger traffic, though O’Leary said if the bid was accepted, Ryanair planned to keep the Alitalia brand. However, Alitalia could expect to see significant changes to its operations. Ryanair would purchase planes — as opposed to leasing them as Alitalia currently does — and while the LCC would plan to keep Alitalia’s current employees, O’Leary said the terms of employment would need to change in order to match Ryanair’s low-cost model.

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A Ryanair 737-800, the only aircraft type it operates. This would change if it buys Alitalia.

Alitalia, which filed for bankruptcy both in the US and in its home country during 2017, has long been a challenging airline to make profitable. The carrier was in bankruptcy in 2008 before being rescued by its country’s government and a group of companies that included Air France/KLM. Alitalia then required another major investment from Etihad in 2014 in order to stay afloat. That investment worked out poorly for the Middle Eastern giant, and neither Etihad nor the Italian government has been willing to invest more resources into rescuing the airline.

According to court papers, Alitalia has been losing upwards of $100 million per month since it filed for bankruptcy, and is also reportedly experiencing an exodus of its pilots as other airlines hire them away, according to a number of current and former Alitalia pilots who spoke to TPG.

Ryanair is not the only potential buyer who has expressed an interest in purchasing Alitalia, but bids to buy the airline are due by October 2. So we’ll find out soon enough if the largest low-cost carrier in Europe is about to get even larger.

H/T: CNN Money

Featured image by Tiziana Fabi via Getty Images.

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