THE privately owned Irish airline Ryanair yesterday refused to comment on British media reports that it is close to securing a strategic alliance deal with British Airways (BA).
A report in The Observer newspaper said the deal between the two airlines, which could be completed within the next few weeks, would result in Ryanair taking on British Airway's livery colours and becoming a BA Express Franchise Partner.
A spokeswoman for Ryanair said yesterday that it was not airline policy "to comment on speculation". Ryanair's chairman, Dr Tony Ryan, was not available for comment. British Airways said it had a long standing policy of not commenting on reports of possible mergers, acquisitions, or alliances.
While it is not clear whether BA is seeking an equity partnership, according to the report the Ryan family is prepared to offer a 25 per cent stake in the airline to raise capital to buy new aircraft.
If the deal goes ahead BA would want Ryanair to use the British Airways Express brand name and take on its famous red, white and blue livery and flight codes.
BA has been expanding its position in the British domestic market over the past three years and has signed up regional airlines such as Manx Airlines, Rayair, City Flyer Express and Brymon as franchise style partners.
Of these only Brymon is a wholly owned subsidiary. The others are independent and do not pay royalties to use the BA Express name. But they can sell their flights as part of the BA network, and can piggy back on the larger company's worldwide marketing and distribution services.
In return BA is able to offer passengers more services under its own name, but use a much lower cost provider to actually operate the flights.
Ryanair does not publish its accounts but the airline is rioving strongly into profit, according to documents filed with the Companies Office in Dublin. Its most recently filed accounts, which are for 1993, show that pre tax profits doubled to £2 million on the back of a 13 per cent rise in turnover to £57.1 million. Ryanair's turnover is thought to have since increased to about £68 million.
The company's after tax profit for the year was £1.9 million as its tax bill was reduced by previous losses. Ryanair used the profits to reduce its accumulated losses to £17.6 million. In the statement which accompanies the 1993, which were lodged earlier this year, Ryanair said that it expected to further reduce its accumulated losses during 1994.
Ryanair had accumulated losses of £20 million during its start up phase, but the company turned the corner after a major rationalisation in 1991. Staff numbers were cut from 700 to 500, and the airline introduced a new cheap fares/low cost approach on the London Dublin route.
Ryanair's no frills policy has been highly successful, and the company expects to carry about 2.5 million passengers this year.
Two new jets are being added to it5 existing fleet of 11 Boeing 737 aircraft.
Ryanair, which operates services to Stansted, Gatwick and a number of British regional airports, also intends to add a number of new routes later this year.
The company also plans to invest £2.5 million to build a new telemarketing subsidiary Ryanair Direct which will create 200 new jobs, returning total employment at the company to about 700.
