Is European airline consolidation ready to begin?
In the past week, speculation has arisen that low-cost carrier easyJet is considering a bid for fellow UK airline Monarch Airlines, following on from reports that Monarch’s owners Greybull Capital has drawn up its own list of potential acquisition targets including airberlin, TuiFly, Thomas Cook Airlines and an unnamed Spanish LCC.
While mere speculation at this stage, The Sunday Times story has reignited the discussion about the potential emergence of acquisition-driven consolidation in Europe, mirroring the trend that has dominated the US market over the past four years.
While consolidation in Europe has been long anticipated in various forms, it has been slower to take off compared to the other side of the Atlantic, with the most recent instances being IAG’s acquisitions of Spanish LCC Vueling in 2013 and Ireland’s Aer Lingus last year.
But should a long overdue consolidation of some of Europe’s carriers occur, many predict this will most likely happen in the fragmented LCC segment, an area viewed as ripe for new alliances.
While the likes of easyJet and Ryanair have defied the region’s challenging operating environment and become highly profitable, this hasn’t been the case for many of Europe’s other LCCs.
Two of the airlines linked with being acquired - airberlin and Thomas Cook - have incurred heavy losses in recent times. Airberlin posted a €377m loss ($458m) for 2014 and has since undergone restructuring in a bid to slash operating costs, while Thomas Cook only returned to profit for the first time in five years last November.
But while there are many more airlines in Europe's compared to the US and operating in different conditions, many of its carriers will nevertheless look across the pond enviously at the series of mergers that have been largely credited with transforming the profitability of the likes of American, Delta and United to record levels.
And despite the era of US consolidation being viewed by some as entering its final throes at the end of 2015, the trend has continued into this year with Alaska Airlines agreeing a $4bn acquisition of Virgin America earlier this month.
Based on statements made last year from the CEOs of Lufthansa, AFI-KLM and even Monarch themselves predicting the future of Europe’s airline industry, consolidation seems to be more a case of when rather than if.
And should that time finally arrive, many will view it as a welcome shot in the arm.
fonte: MRO Network
In the past week, speculation has arisen that low-cost carrier easyJet is considering a bid for fellow UK airline Monarch Airlines, following on from reports that Monarch’s owners Greybull Capital has drawn up its own list of potential acquisition targets including airberlin, TuiFly, Thomas Cook Airlines and an unnamed Spanish LCC.
While mere speculation at this stage, The Sunday Times story has reignited the discussion about the potential emergence of acquisition-driven consolidation in Europe, mirroring the trend that has dominated the US market over the past four years.
While consolidation in Europe has been long anticipated in various forms, it has been slower to take off compared to the other side of the Atlantic, with the most recent instances being IAG’s acquisitions of Spanish LCC Vueling in 2013 and Ireland’s Aer Lingus last year.
But should a long overdue consolidation of some of Europe’s carriers occur, many predict this will most likely happen in the fragmented LCC segment, an area viewed as ripe for new alliances.
While the likes of easyJet and Ryanair have defied the region’s challenging operating environment and become highly profitable, this hasn’t been the case for many of Europe’s other LCCs.
Two of the airlines linked with being acquired - airberlin and Thomas Cook - have incurred heavy losses in recent times. Airberlin posted a €377m loss ($458m) for 2014 and has since undergone restructuring in a bid to slash operating costs, while Thomas Cook only returned to profit for the first time in five years last November.
But while there are many more airlines in Europe's compared to the US and operating in different conditions, many of its carriers will nevertheless look across the pond enviously at the series of mergers that have been largely credited with transforming the profitability of the likes of American, Delta and United to record levels.
And despite the era of US consolidation being viewed by some as entering its final throes at the end of 2015, the trend has continued into this year with Alaska Airlines agreeing a $4bn acquisition of Virgin America earlier this month.
Based on statements made last year from the CEOs of Lufthansa, AFI-KLM and even Monarch themselves predicting the future of Europe’s airline industry, consolidation seems to be more a case of when rather than if.
And should that time finally arrive, many will view it as a welcome shot in the arm.
fonte: MRO Network
