The Malta Independent 30 November 2022, Wednesday
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Air Malta is too small to survive – Ryanair CEO

Sabrina Zammit Sunday, 25 September 2022, 09:30 Last update: about 3 months ago

Air Malta is too small to survive, Ryanair CEO Michael O’Leary said in comments to The Malta Independent on Sunday.

No airline can survive in a marketplace which is increasingly dominated by low-cost airlines like Ryanair if all you have is eight aircraft, he said.

O’Leary was speaking to TMIS after he announced that Ryanair will be increasing five new destinations from Malta. The airline’s new winter schedule includes flights to and from five new destinations from Malta, which are Bordeaux, Bournemouth, Lisbon, Shannon and Stockholm.

Asked whether he believes Air Malta will ever disappear, he said that in his experience governments always give more money to their national airlines.

"Even when it is bankrupt, which Air Malta is, government will find a way to keep it alive," he said.

“I don’t think that Air Malta will disappear but I think it’s going to prove to be very difficult to make it break even. It will never make a profit,” he said.

As an example, O'Leary mentioned how the same happened with Alitalia, Italy’s national carrier. He said that the Italian government always found ways to keep it alive.

O’Leary said Ryanair has built a very successful partnership with the Maltese authorities and Maltese people. The Maltese now know that there is an alternative to Air Malta.

 

Possibility of increasing Ryanair fares

Asked about the Ryanair situation, the CEO said that if "oil prices remain high this winter, I don't think there will be any €9.99 airfares".

He added that there will be a small increase in air fares over the next 12 months if oil prices remain at the current $120-$130 a barrel.

He said that if the war in Ukraine stops, then the oil prices will settle down again and there could be a return to the lowest air fares.

O'Leary explained that the company managed to hedge its oil till next March at $64 per oil barrel, which is about 50% of current oil prices per barrel, which stand at a starting point of $110.

He added that if they were to increase, Ryan air fares would still be "by miles" cheaper than competitor airlines.

"We think that if oil prices remain at a $100 barrel for the next three to four years, then our average fare, which last year was about €40, will creep up in the next four to five years maybe towards €50, but they're not going to be like a €100 or €200, they'll still be very low fares," he said.

 

Covid-19 recovery and scheduled targets

O'Leary said that the company's recovery was a very fast and stronger one "than any other airline in Europe".

He explained that Ryanair will be the only airline this year to have carried more passengers than it did pre-Covid.

"Pre-Covid we carried 149 million passengers, this year in 2022 we expect to carry about 166 million passengers… so we're recovering strongly … that means that today we are having more growth here in Malta," he said.

Referring to targets, and what has the airline already achieved in Malta, O' Leary said Ryanair is planning to invest more this winter.

He said that apart from the first hangar that the company built in Malta, there are another three planned to be built and opened over the next three to four years.

Mentioning environmentally-friendly initiatives, the CEO said that Ryanair is investing some $20bn in new aircraft, with the first 70 already taken in this year.

He explained that these aircraft have 4% more seats so every flight carries 197 seats. Additionally, they burn 16% less fuel and they reduce noise emissions by 40%, resulting in a much cleaner technology.

He said that this technology is also being deployed to Malta.

"It means we are carrying more people but with a smaller environmental footprint and I think that's vital and important; that all the growth that we are going to deliver over the next four to five years will be on these new technologies, which means we will be flying people at lower prices but a much smaller environmental footprint as well."

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