Ryanair case

Essay by kevinnguyen January 2005

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Summary Ryanair - the low fares airline

A new airline company was founded in 1985, namely Ryanair. This company was the first competitor for Aer Lingus. During the first years, they were actually "a full service conventional airline" . They had two different classes of seating and they leased three different types of aircraft. At the beginning of the nineties they turned there airline company from a full-service into a low-fares, no frills-carrier. The restyling had been based on the model of Southwest Airlines. Tony Ryan who was the founder of this company hired Michael O'Leary who was going to lead the new management team. As a result of the restyling in 1997, they were able to become floated on the Dublin Stock Exchange and the NASDAQ.

The family sold the company for IR₤56.7 million and purchased a stake of 61% for just only IR₤3.1 million. Michael O'Leary also purchased a stake, which was 17.9%

for IR₤0.9 million. Another investment group (David Bonderman) invested IR₤1 million in equity and an IR₤24 million loan through Irish Air (vehicle company). In return they received a stake of 19.9%. David Bonderman, who was already chairman of Continental Airlines, became also chairman of Ryanair at the flotation. During the following years the shares of the Ryans, O'Leary and also Bonderman decreased. Since Ryanair is a European carrier, they will have to have a majority of shares held by EU nationals. This means there might be some limitations of trading shares outside the EU.

Maintaining their "position as Europe's leading low-fares airline, operating frequent point to point flights on short-haul flights, mainly out of regional and secondary airports" . No frills service with low fares, in order to stimulate demand from budget- conscious leisure and business travellers. Ryanair wants to achieve growth by initiating additional...