Air Scoop November 2006

Highlights in this Issue

Which Low Cost Model in Scandinavia? DirectFly: Regional or LCC? LCCs: Focus on Ancillary Revenues Battle in Central Europe: SkyEurope and Wizz Air Ryanair: Europe is Not Enough!

The Low Cost Carriers Analysis Newsletter

EDITORIAL

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entral and Eastern Europe markets are under heavy competition between local carriers (‘Centralers’) and LCCs leaders from the UK (‘Islanders’). Wizz Air, one of the main ‘Centralers’, faces both SkyEurope and Ryanair for these markets (p. 2 and 8). Smaller local carriers must adapt their business model to face this strong competition, such as Direct Fly in Poland (p. 5), which focus on regional and niche markets. Meanwhile, consolidation of LCCs markets keeps going on. After Germany with Air Berlin and dba, the UK seems to be propitious for such evolutions. Even if Ryanair’s takeover bid for Aer Lingus seems to have failed, other deals are ongoing, such as Flybe taking over BA Connect (p. 4), and this should be just the beginning! Competition has become too hard on many European markets, and LCCs need to find new ones in order to survive. It is the case of Ryanair which opens new routes to farer destinations (p. 9). However, longer distances could imply a modification of its initial business model. As we heard many times during recent Low Cost Airlines Congress 2006, it is now difficult to clearly define a low-cost carrier. Due to many different business models, each carrier has its own specificities, and one model cannot apply to all markets. Thus, Maunu von Lueders, CEO of FlyNordic, explains specificities of low-cost carriers in the Scandinavian market (p. 4). However, one constant factor in LCCs is the need of ancillary revenues. They are essential to offset the low prices of tickets. To better understand these revenues, IdeaWorks Company has realized a study about frequent flyer programs of some European LCCs (p. 6). In its race to gain new destinations and open new routes, Ryanair faces unexpected hurdles in Malta. The Irish carrier already had to face politicians and some tourism industry workers that pointed out that massive tourism could have a negative cultural impact on Malta. Now problems come from Malta International Airport (MIA) which is accused by the carrier of inflating its charges. However, Michael O’Leary went to the island to met MIA CEO Peter Bolech and Tourism Minister Francis Zammit Dimech. He walked into the airport’s conference room draped in a Maltese flag and dressed up casually, and quipped «I was told to go to Malta because there is all-year-round sunshine and the moment I step off the plane it starts raining. That’s it, I’m pulling Ryanair out of Malta». He repeated it was essential that the government also plays its part in lowering the cost of travel by attacking the monopoly airport costs and by reducing this prohibitively high ticket tax. Details of negotiations are for the time being confidential...

p. 2 p. 3 p. 4 p. 6 p. 7

AIR SCOOP ANNOUNCEMENTS Air Scoop Exclusive Interviews Every month, Air Scoop Team interviews a top executive of a European LCC. These interviews are available on our website. Current Exclusive Interviews available: ° Chris Mandl (CEO of SkyEurope) ° Bertolt Martin Flick (CEO of AirBaltic) ° Maunu von Lueders (CEO of FlyNordic) ° Carlos Munoz (CEO of Vueling) Read all our Exclusive Interviews on Air Scoop.com

Air Scoop & IdeaWorks Air Scoop is proud to have developed links with IdeaWorks. IdeaWorks was founded in 1996 as a consulting firm building brands through innovation in product, partnership, and marketing and building profits through financial improvement and restructuring. IdeaWorks specializes in brand development, profit improvement, competitive analysis, creating partner-marketing strategies, cost reduction programs and business restructuring. IdeaWorks brings value as a consultant by researching the expectations of the customer, learning from the wisdom of the client organization and applying innovative ideas to create solutions for clients and consumers.

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Air Scoop - November 2006

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BIRD’S EYE VIEW ANALYST PORTHOLE Which low-cost model in Scandinavia? The biggest losers have been those low-cost carriers that were established and owned by traditional airlines and operated in head-on competition with their parent companies. Low- cost airlines, such as Go, Buzz, Tango, Snowflake, Song…, have all been wiped out from the roster of low-cost airlines. We will probably see less of these cases in the future as the incumbents have learned their lesson. But is the basic Ryanair model a viable concept for all markets and for all customers? Does “one size” or “one form” fit all? Definitely not! There are markets where the basic model would not be very successful. An example of this is the large IntraScandinavian business travel market. These business travelers have been used to a certain level of service and although many of them are also price sensitive they are not willing to give

up a lot of service features in exchange for a lower fare. In most cases the costs of travel will burden the companies who seek cost cuttings and savings and not the passengers who seek personal benefits such as comfort, recognition and status. The combination of these two different perspectives regarding business travel has however created a new set of choice criteria which has one foot in the old and one foot in the new world. An annual survey made among a couple of thousand Swedish corporate travel accounts reveals the choice criteria that the airlines should try to satisfy in order to capture the business. The basic low-cost model would not be able to satisfy the needs and expectations of the business travel segment within Scandinavia even though Price is by far the most important factor. Price alone is not enough to make a customer to switch cost. This why a low-cost carrier in Scandina-

by Maunu von Lueders (CEO of FlyNordic) via faces the challenge to keep the costs down while providing added value similar to what the customers are expecting. This low-cost niche model represents a different approach to lowcost air travel and it shows that different kinds of models are needed in special markets for special segments and that one size does not fit all. Read our Exclusive interview of Maunu von Lueders on Air Scoop July 2006

Flybe + BA Connect: The Largest European Regional Airline British Airways edged down its full-year revenue growth expectations, and announced its plans to sell its regional operation unit, BA Connect, to Flybe. Security disruptions due to terrorist alert in Mad-August had an impact on the decline in operating profits of BA Connect, and led to this sale. Based in Manchester and formerly named CityExpress, BA Connect has 1900 employees and operates 52 routes from 13 UK regional airports. BA Connect has been a lossmaking unit for British Airways, in particular because of higher fuel costs and security-related disruption. The deal includes that BA will take 15% stake in Flybe, but excludes BA Connect’s Manchester-New York route, and services out of London City Airport which will still complement BA’s mainline business at Heathrow. Even if both networks will complement each other, BA Connect requires a huge sum to replace its fleet. Flybe announced it will replace current aircrafts with more fuel- efficient ones. Flybe is based in Exeter; the carrier employs 1800 staff and operates 101 routes from 21 UK airports. Head management has already admitted job losses at BA Connect’s head office in Didsbury.

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The transaction is till now an agreement in principle, and still subject to due diligence. If the deal is signed, Flybe would take a serious option to face future strong consolidation of European LCCs, as its planned initial public offering has been delayed until the first half of 2008. Jim French, Chairman and Chief Executive of Flybe, affirmed that this acquisition will make Flybe the largest regional airline in Europe and one of the largest in the UK. The LCCs UK market is definitely very active these days after Ryanair’s takeover bid for Aer Lingus. Context is now the same, so will the acquisition face same opposition from unions and employees?

Jim French, Chairman of Flybe

Air Scoop - November 2006

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BIRD’S EYE VIEW Direct Fly - Regional or “Low Cost” Carrier in the Polish Niche Market? During the last few years, the European airline industry has experienced quick and dynamic changes, which have led to the establishment of low cost airlines. The term “low cost” used in the airlines classification is related to some other synonyms such as “low fare“, “low budget“, “discount” or “no frills“. This term generally defines any carrier with low fares but without many traditional passengers’ services. Nevertheless some general characteristics of the low cost business model (for instance: a single passenger class, secondary airports, short flights, unallocated seats, operation of one type of airplane…) are not implemented the same way by every “low cost” airline. The main reason is that some carriers try to differentiate themselves from their rivals. Since 2001, when aviation industry suffered heavy losses, traditional airlines entered a period of reorganization of their market and their strategies. Many carriers opted to launch their own low cost subsidiaries (KLM, BA, Lufthansa, LOT, Iberia and some others) in response to the new phenomenon in European market. “Open Sky Policy”, which is the consequence of globalization and liberalization, has enabled the rapid spread of low cost carrier model. In April 2006, a new Polish airline, Direct Fly joined the European Open Sky. Direct Fly is now operating scheduled domestic flights to three destinations within Poland. The carrier differentiates itself emphasizing on alternatives to fly on completely new routes with low fare tickets, but in the same time more comfortably than with LCCs. Direct Fly operates two SAAB´s 340A with 34 seats. From that point of view, it can be described as a regional carrier with connections that are not able to be supported by larger aircrafts. Ticket prices start from 169 zlotych (approx

AIRWAY MARKERS http://www.directfly.pl/ 42 Euros) with taxes included. Direct Fly offers services on board and options to purchase a package of twenty or fourteen tickets at fixed and discounted price. After the launch, Direct Fly began flights to four international destinations: Berlin, Copenhagen, Kiev and Lvov. However, the carrier was forced to cease all of them after just one month of operation. Polish destinations, like Bydgoszcz, Lodz and Rzeszow, have also been eliminated from the Direct Fly schedule. Nowadays its offer includes six domestic routes from Gdansk to Krakow and Wroclaw, and from Warsaw to Wroclaw, with ambitions to expand flights to Katowice, Szczecin and Poznan. Direct Fly is the first company on Polish market which offers direct connections between polish cities, especially between Gdansk in the north and Krakow or Wroclaw in the south, within 1 hour and 20 minutes range. Danish are living from the NATO basis, was supposed to be a niche goal. Direct Fly with 34 seats on the aircraft is not looking for mass market, its positioning is rather on the niche market. The polish market is operated by six low cost airlines, with high competition and regularly new cheap connections. Consolidations in the deregulated market are inevitable, so there would be two options for Direct Fly to survive in this high competitive low cost market: First one would be the ability to offer lower prices than other operators, but meanwhile staying profitable from a long term point of view. The second one would be to find the right niche. It appears Direct Fly has chosen to focus on this option with its expansions course.

UPS AND DOWNS And the Winner is… Flybe! For the second year running, Flybe has been voted “Best Low Fares Airline” at the Northern Ireland Travel News Awards on Friday 13th October. This award is the result of votes taken from members of the travel trade in the region. “Winning the award for the second consecutive year was a fantastic achievement given the evident strength of the competition here in Northern Ireland” declared Stephen Hoblay, Flybe’s Head of Sales.

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SkyEurope: Fined for Misleading Advertisement The 25th of October, SkyEurope was fined almost 200 000 euros by the Hungarian Competition Authority (Gazdasági Versenyhivatal - GVH) for misleading passengers with its advertisements. The GVH “concluded that the advertisements of SkyEurope Airlines were misleading consumers because it only stated the price of the flight ticket, but omitted to indicate that other fees, taxes, etc. also have to be covered in order to purchase a flight ticket.» Furthermore, SkyEurope’s advertisement slogan «the most flights at the best price» was deemed to be unlawful as SkyEurope hasn’t been able to demonstrate the truthfulness of this statement. SkyEurope said it would appeal the fine with the Budapest Municipal Court.

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DOWN TO EARTH ‘‘IDEAWORKS AISLE’’ Europe’s Top 4 Low Cost Carriers Generated €470 Million From Ancillary Revenue Sources in 2005... But U.S. frequent flier programs produced revenues estimated at €2.5 billion and better per passenger results. Revenues from non-ticket sources, which are called ancillary revenues, have become an important financial component for low cost carriers (LCCs) in Europe and throughout the world. Michael O’Leary, Chief Executive of Ryanair, Europe’s largest LCC, wants to offer free airline tickets by replacing traditional ticket sales with revenues produced by ancillary activities. His statement reflects how Europe’s LCCs have morphed the Southwest Airlines model of providing overall value into an a la carte style of offering ultra-low fares and charging consumers for services such as checked baggage. Mr. O’Leary needs to add a frequent flier program if he wants to squeeze more revenue from non-traditional sources. IdeaWorks estimates Ryanair’s aggressive use of a la carte pricing generated ancillary revenues of €7.76 per passenger, while United’s Mileage Plus frequent flier program posted amazing results of €9.40 per passenger. Even US-based LCCs are realizing attractive ancillary revenues from their relatively young programs. For example, the co-branded credit card linked to Frontier’s EarlyReturns program contributed revenues of €19.6 million during 2005. In practice, ancillary revenues are often the a la carte services and features that passengers may purchase before or during their travel experience. Legacy airlines bundle these services into the price of an airline ticket. LCCs, and especially those outside the United States, tend to un-bundle the travel experience. Under this scenario, consumers purchase basic airline transportation and may pay extra for services such as advance seat assignments, checked baggage and onboard snacks and drinks. The prevailing LCC model in the United States focuses on value - - providing good service at a fair price. For example, LCCs such as AirTran, JetBlue, Frontier, Spirit, US Airways and Southwest offer frequent flier benefits, free checked baggage, and do not charge extra fees for payment by credit card. Outside of the United States, LCCs emphasize ultra-low fares and often tie these services to the payment of additional fees.

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by Jay Sorensen (President of IdeaWorks)

Ryanair led the development of LCCs in Europe and borrowed Southwest’s original model of low fares and no frills. Ryanair has a reputation for ruthless cost cutting and charging consumers for services beyond basic transportation. On the expense side, it has removed tray tables and window shades to lower fuel and maintenance costs. On the revenue side it charges fees for checked baggage and for ticket purchases made via credit cards. LCCs in Europe and throughout the world have largely embraced Ryanair’s mantra of cutting costs and charging service fees. Michael O’Leary’s vision of making flying free by 2010 has raised the profile of the ancillary revenues generated by LCCs. The investment community views robust ancillary revenues as an indicator of an effective and creative management team. IdeaWorks researched the financial statements of the more established LCCs in the world and found the following list “ancillary revenues” in their financial reports: AirAsia, Air Berlin, easyJet, Ryanair, SkyEurope, Virgin Blue, and WestJet. This represents a clear distinction from the LCC experience in the United States, where the financial statements of U.S. carriers are largely silent on the issue. But some U.S. airlines report the revenues generated from their frequent flier programs. IdeaWorks believes these financial results should qualify as ancillary revenues. For major airlines, such as United and Alaska, these revenues are significant enough to warrant inclusion in Form 10-K annual reports. United attributed revenues in excess of €627 million to its Mileage Plus frequent flier program for 2005. IdeaWorks retrieved ancillary revenue data from established LCCs in Europe, Asia and the United States as shown in the table. Alaska and United were included as representative of the results generated by major U.S. airlines that operate mature frequent flier programs.

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DOWN TO EARTH Europe’s LCCs have been very creative in developing opportunities to encourage air travelers to spend money. Virtually all LCCs in Europe, and many of those elsewhere in the world, already allow consumers to arrange hotel accommodations, car rentals and trip insurance at their web sites. The airlines are paid a commission by third parties for each completed sale. Ryanair’s home page offers a virtual shopping mall experience with offers for car insurance, personal loans, pre-arranged airport parking, airport motor coach transfers, airport lounge access, co-branded credit cards, holiday packages, bed & breakfast stays, and golfing in Ireland. The airline has also turned its baggage service into a profit center. Checked baggage can be pre-paid at the time of booking at a cost of €4.50 per piece, or €10.00 if paid at the airport. Like many other LCCs outside of the United States, Ryanair charges an additional fee for payment by credit card. The fee for MasterCard and Visa charges is €2.50 per passenger per flight. The fee is lower for debit card transactions and is waived for infant travelers. Airlines all over the globe seek to emulate the ancillary revenue results obtained by Ryanair. The phrase has become popular with airline management and investors. Aer Lingus used the word “ancillary” more than 70 times in its recent public share prospectus. Major airlines, such as British Airways, now openly express the desire to increase ancillary revenues in their presentations to the investment community. The analysis performed by IdeaWorks suggests even greater ancillary revenues may reside in an activity traditionally scorned by LCCs . . . frequent flier programs. United and Alaska have proven the financial power of these programs through results that approach €10 per passenger. These programs not only have revenue potential, they also make consumers more loyal to a brand. Ironically, these programs already allow millions of program members to enjoy the free flight sought by Michael O’Leary for the year 2010. Sources used in this Industry Analysis: Unless otherwise noted, frequent flier program information presented in this report is based upon an online review conducted during October 2006 of airline financial filings, web sites, and communication with airline management. Currency exchange rates were calculated during October 2006 at the XE.com web site.

1. 518 million passengers were carried by U.S. major airlines during 2005. IdeaWorks estimates minimum frequent flier related revenues were €4.77 per passenger. 2. “A radical fix for airlines: Make flying free” Business 2.0 Magazine, March 31, 2006. 3. AirAsia estimates are for the AirAsia Group (Malaysia, Thailand, Indonesia) for the fiscal year ended June 2006 and reflect 8.4% of group revenues, as referenced in financial documents. 4. SkyEurope results are for the 9 month period ended June 2006. 5. Virgin Blue results are for the fiscal year ended September 2005 and reflect 4.9% of total revenues, as referenced in financial documents. Disclosure: IdeaWorks makes every effort to ensure the quality of the information available in this report. Before relying on the information, readers should obtain any appropriate professional advice relevant to their particular circumstances. This Industry Analysis was independently produced and has not been completed as work on behalf of a client company. IdeaWorks cannot guarantee, and assumes no legal liability or responsibility for the accuracy, currency or completeness of the information.

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BIRD’S EYE VIEW LCCs Battle in Central Europe: SkyEurope vs. Wizz Air German As the competition between low-cost airlines becomes stiffer, it is interesting to compare how two major Central European carriers face this battle. Both SkyEurope and WizzAir have been successful in capturing their home market where they have capitalised on the advantages of being first-movers. SkyEurope’s business model Established in 2002, operating from five bases (Bratislava, Budapest, Prague, Krakow and Warsaw), currently flying with 15 Boeing 737 aircrafts, the Slovakian SkyEurope has shown a massive passenger growth rate although the company does not follow strictly the classic low-cost business model. Apart from assigning seats to passengers, it serves several major, but contested, airports like AmsterdamSchipol, Paris-Orly, Barcelona or Rome-Fiumicino. Consequently, this strategy involves higher unit costs that are currently around 6 eurocents per available seat kilometer. This implies that the carrier needs a relatively high breakeven load factor (above 75%). However, in the first nine months of 2006, SkyEurope achieved on average only 71% which partly explains why the company is accumulating deficit. Even though the IPO in September 2005 (listed in the Vienna and Warsaw stock exchange) gave the company greater access to capital markets, share prices have declined sharply which makes the financial situation critical. Although SkyEurope dominates the routes between Slovakia and the UK, Poland, France and Italy, it needs to capture market share in those routes that attract greater traffic. Building on the opportunity that Bratislava can be an alternative airport to Vienna, and the fact that Krakow is a popular tourist destination all-year round, SkyEurope has systematically opened up routes from these bases to major Western European and Mediterranean destinations. Wizzair’s strategy Unlike its Slovakian rival, the Polish-Hungarian WizzAir (established in 2004) is a private limited company which implements the classic low-cost model with only a few exceptions. Operating from five bases (Katowice, Budapest, Warsaw, Gdansk, andSofia) WizzAir flies to secondary airports (it recently gave up flying to contested Schipol and changed the destination to Eindhoven), therefore it manages to achieve quick turnaround times that enables the company to highly utilize its 9 Airbus A320 aircraft. Due to these factors, Wizz Air’s units cost is comparable to that of Ryanair, currently it is around 4 eurocents. Building on the extensive relational network of the CEO, who formerly was the CEO of the Hungarian national air carrier Malév, the

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company enjoys a relatively stable financial background although it has not yet turned profitable and is constantly in need of cash. Having captured 15% of the overall Polish market, the company extensively builds on the mass flow of labour between Poland and Western Europe (especially the UK and Sweden) while keeps penetrating the Central European market by opening up West-East routes. In the summer period, Wizz Air offers weekly flights from Katowice and Budapest to popular Mediterranean tourist resorts, thereby it directly competes with charter airlines. Its strategy, however, includes only a limited service of routes between Central European destinations (from Budapest to Transylvania, Bucharest, Sofia and Warsaw). Comparison and implications for the future Although both low-cost carriers have established a strong home-base which is a powerful resource for the future, their further expansion depends on several other factors. SkyEurope has gained foothold in Prague (major competitor is Smartwings), Krakow and Bratislava, while Wizz Air is particularly strong in Poland. Since many of SkyEurope’s destinations are touristic resorts, the company is to a great extent exposed to the seasonal fluctuation of market demand. In this sense, WizzAir is more protected since the Polish market provides a relatively stable demand over time, although it has to face a strong local rival, Centralwings. Both Wizz Air and SkyEurope try to enter new Central and Eastern European markets, their primary focus recently is Romania and Bulgaria. In the former one, WizzAir has made a strong strategic commitment with opening up 9 new routes by January 2007, while SkyEurope proved to be slower to penetrate this important, much underserved market. Since both carriers are strongly committed to expanding their capacity (both have 32 new aircrafts on order) to reach economies of scale and to achieve a critical mass that ensures operating at minimum efficiency scale, they are likely to continue opening up further Western-Eastern routes but a shift towards EastEast routes is also probable.

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BIRD’S EYE VIEW Given its higher unit cost and vulnerable financial situation, SkyEurope is endangered by the so-called stuck-in-the-middle problem. It is neither a classic low-cost carrier in terms of its business model nor a traditional one. If competition intensifies and the capacity expansion does not meet the increase in market demand, SkyEurope may not be able to cope with the price competition posed by carriers having a lower costbase. It is not certain that there is a big enough market niche in Central Europe between the classic low-cost carriers and traditional ones that could be served by SkyEurope. Wizz Air’s concern is its limited access to capital and the need to generate cash. Although an IPO is planned by the CEO, it is unlikely to get it accomplished in the nearest future. As a typical symptome of low-cost carriers, both SkyEurope and Wizz Air need to extend their revenue base, thus they have already engaged themselves in diversifying their business and have entered into strategic alliances with tour operators and car rental companies. Nevertheless, the expected higher ancillary revenues will not solve their problems of becoming profitable until they do not reach the minimum efficiency scale that is estimated between 25 and 30 aircrafts. The most likely outcome is that both companies will try to strengthen their established markets, thus there might be a shift towards serving home routes (East-East destinations) and increasing the frequency in the already served West-East routes. This way they could capture these markets before the Islanders massively extend their networks to Central and Eastern Europe. All in all, Wizz Air’s and SkyEurope’s most crucial task is to increase the load factor and to keep costs low: tasks that seem to be simple but much harder to accomplish.

Ryanair: Europe is Not Enough! It appears that over years, Ryanair has added longerdistance routes to its network, with destinations such as Malta, Morocco, Canary Islands… The main questions are now: How far will Ryanair go? And which impact will this have on its business model? During the World Low Cost Airlines Congress 2006, Bernard Berger, Director of New Route Development of Ryanair, already answered questions concerning average time increase on routes. He said that, even if Ryanair intends to keep flights as short as possible, the Irish carrier will need to find new markets as far as they are in order to maintain its growth. The carrier even considers adding destinations in Russia as soon as the country enters a bilateral air services agreement with the European Union. These medium-haul routes would be a natural extension to Ryanair’s current network. This expansion towards East is clearly visible in Poland (Read next Air Scoop December 2006) and creates high competition with local LCCs:

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(1) According to the winter schedule. Wizz Air flies to secondary airports like Paris-Beauvais, Barcelona-Girona, Rome-Ciampino, while SkyEurope directly flies to the major airports of these destinations. (2) Even though Wizz Air flies from Katowice while SkyEurope from Krakow, the two airports are in direct competition with each other due to their poximity to each other.

the “Centralers” (SkyEurope, Wizz Air, CentralWings…). With its “Go East” strategy, SkyEurope has still the first mover advantage in developing markets in countries that will soon join the European Union, but for how long? Ryanair doesn’t seem to be willing to restrict itself to the European market. Indeed, Michael O’Leary considers setting up a partner company to operate long-haul flights between Ireland and the US. This declaration to Ryanair’s shareholders was before takeover bid for Aer Lingus. This takeover bid could be the first one of Ryanair’s strategy which consists in targeting airlines with long-haul routes. As Aer Lingus offers flights to the USA and to Dubai, the carrier was the perfect target to complete and develop Ryanair’s network. Ryanair faces strong resistance to its takeover bid from Irish Government and Aer Lingus employees, and now has to wait for the European Union’s authorization. Even if Ryanair is not sure to succeed on this shot, it will definitely look for other long-haul targets. Which airline will be the next target?

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BIRD’S EYE VIEW Impact of the FL Group on Scandinavian LCCs industry FL Group is an Icelandic investment company founded in 1973 under the name Flugleiðir. FL Group was well known for its subsidiary Icelandair which has just been sold in October 2006. Its investments in LCCs market are now FlyNordic through Finnair (10%) and Sterling Airlines (100%). Founded in 1993 by Consul Bruno Lucander, Finnair is still controlled by the Finnish Government with 58.42% while FL Group has about 10%. In 2003, the Finnish carrier acquired 85% of Swedish FlyNordic, and then increased up to 100% in May 2004. In October 2005, FL Group bought Sterling Airlines, the fourth largest lowfare airline in Europe, from Fons Eignarhaldsfelag. Late April, after talks about a potential takeover bid for easyJet, FL Group suddenly sold all its shares, about 16.9% of easyJet. The proceeds from the sale of about 68 million shares were approximately €325 millions, but shares in easyJet slumped by more than 11 percent after the move. Such investments funds can’t be ignored as actors of LCCs’ market and must be carefully analyzed. Indeed, LCCs are in competition for money, so in the future, best carriers will also be best funded ones. This is a decisive issue on which Air Scoop will come back on next issues.

BLOGS TREND

Hostile Takeover Bid: Main Weblog Coverage The Blogosphere has been quieter in October than during precedent months. Ryanair still beneficiates from a larger weblog coverage than its competitors, but it appears a bit more balanced. Main news concerning Ryanair in October was its hostile takeover bid for Aer Lingus. Ryanair should learn within in few weeks whether the European Commission will block or not its bid to buy Aer Lingus. Indeed, the European Commission set a provisional deadline of December 6th to clear the deal but can extend that if it receives complaints from rivals or identifies antitrust problems. easyJet is constant with its weblog coverage, especially concerning routes opening (Bristol – Paris) and dropping (Newcastle – Nice) in France.

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Air Scoop - November 2006

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