By Conor Humphries
DUBLIN (Reuters) – Ryanair on Monday predicted it would eventually become Europe’s only major low-cost carrier, with Chief Executive Michael O’Leary claiming a widening gap on costs would make rivals easyJet and Wizz takeover targets.
“Europe is inexorably moving towards a similar out-turn as North America where you will have three very large, somewhat higher cost, high-fare connecting carriers, and one very large low cost carrier” in Ryanair, O’Leary said.
Wizz chief executive Jozsef Varadi, who has always maintained his cost base is comparable to Ryanair’s, last week said he did not see his airline as a takeover target.
A spokesperson for EasyJet, a hybrid player focused on undercutting legacy airlines at established airports which does not see itself as a direct competitor to Ryanair, said “millions of consumers in Europe will be relieved to hear there is no realistic prospect of Ryanair becoming the only low cost airline in Europe.”
O’Leary said both of the rival airlines “would be candidates for M&A over the next couple of years because … they are stuck in a space where they are mid-airfare, mid-cost and they are not able to compete with us on cost or pricing.”
Speaking on a call with analysts following the release of results for the first half of its financial year, O’Leary praised easyJet for establishing a “fortress-like” position in some expensive airports like London Gatwick and Paris Charles de Gaulle, Geneva and Zurich.
But he said the British airline was being forced by Ryanair to retreat in other markets like Italy and Portugal.
Wizz, O’Leary said, was making progress with expansion in the Middle East but was retreating in the face of Ryanair expansion in some parts of its core central and eastern Europe region.
O’Leary said he also expected Portugal’s TAP and Italy’s ITA would both ultimately be taken over by larger rivals.
(Reporting by Conor Humphries, additional reporting by Sarah Young in London; Editing by Mark Potter)