Chapter 999 Airlines

"The negotiations between us and Alitalia are not going smoothly. The Italian government has not responded positively to our request for staff reduction and partial asset restructuring..."

Gerald Reynolds, CEO of European Wealth Funds, told Barron’s:

“In addition to us, Etihad Airways has also expressed interest in Alitalia. This airline has always liked to expand their global network by acquiring stakes in other airlines. This time they are preparing to acquire 49% of Alitalia. shares.”

It is obvious that this time the European wealth fund has set its acquisition target on Alitalia - the reason for choosing the acquisition is that according to the analysis of Gerrard's team, the airline will be in a very difficult situation if it cannot make radical changes. Somewhat reversed.

Alitalia, founded in 1946, is Italy's largest state-owned airline, with the Italian government as its largest shareholder.

Due to the low efficiency of the company's operation and management, labor costs have remained high for a long time, and under the influence of low-cost airlines such as Ryanair and EasyJet that continue to penetrate the market, Alitalia has been in a state of loss for a long time since 2002.

In order to improve the company's financial structure and improve operational efficiency, since 2004, the Italian government has begun to sell its shares in Alitalia.

Although the Italian government tried every means to save Alitalia, Alitalia, which was struggling with continued losses, declared bankruptcy and reorganization in 2008.

However, the restructured Alitalia failed to restore the decline, causing the Italian government to abandon its rescue plan for the company and plan to sell it as a whole.

Since 2009, Alitalia has been privatized.

Although the Italian government provided 500 million euros in aid funds to rescue Alitalia, the move still failed to reverse Alitalia's decline. The company once suffered a daily net loss of 1.5 million euros.

Last year, in 2013, Alitalia's main shareholder Air France-KLM refused to inject more capital and reduced its stake from 20% to 7%, which also brought Alitalia to the brink of bankruptcy again.

So the Italian government had to find new investors for Alitalia.

This is also where the differences between the European Wealth Fund and the other party lie - the Italian side hopes to obtain funds for Alitalia to maintain its operations, but after assessment, the European Wealth Fund team believes that Alitalia's poor management efficiency and high labor costs will not be sufficient if it cannot If a certain degree of layoffs and asset restructuring are carried out, it will still not be able to get out of the current predicament.

If this is the case, then Alitalia needs to be "reformed" after the overall acquisition, but under the current circumstances, the Italian government does not want to cause employees to lose their jobs - after all, the Italian economy is still relatively sluggish so far, and they are more Jobs are needed to stabilize society.

"The Italian side doesn't have much objection to the overall acquisition price of 3.5 billion euros that we proposed, but the only thing is that they don't want us to carry out large-scale layoffs after taking over..."

Hearing Gerald Reynolds' words, Barron shook his head:

"If that's the case, then the result can only be that our funds are filled into the black hole of this company, which is not what we should do."

He turned to ask:

"You said before that Ryanair and easyJet have been increasing their share in the Italian market?"

“Yes, Your Highness, statistics show that from 2008 to now, Alitalia’s market share has dropped from 23% to less than 20%, while Ryanair’s market share in Italy has rapidly increased from 12% to 23%. %, currently ranking first in the Italian aviation market share..."

"Then approach Ryanair and see if we can acquire them."

Ryanair is an Irish airline founded in 1985.

In the early 1990s, in order to reverse Ryanair's operational difficulties, founder Tony Ryan sent the then 26-year-old O'Leary to Dallas to learn from Kelleher, the founder of Southwest Airlines.

As the two chatted late into the night over wine and cigars, O'Leary finally learned from Kelleher the key factors for a successful operation, including the importance of faster aircraft turnaround times, an absolute focus on cost and using the same aircraft. The model is designed to simplify maintenance and training.

Since then, Ryanair has grown from one plane and 5,000 passengers to one of the largest low-cost airlines in Europe, taking advantage of its low prices.

"Currently, Ryanair has the highest profit margins among airlines in the world, even though the prices of their tickets have been falling..."

It seems that Gerald Reynolds has also conducted in-depth research on Ryanair before this.

Ryanair pays great attention to cost control, which is reflected in several aspects-

First of all, the company's personnel are very streamlined - generally there are only two "stewardesses" on Ryanair's planes, while other airlines generally have five "stewardesses" on their planes.

In 2001, Ryanair successfully transported 9 million passengers with 1,500 employees, while Aer Lingus carried only 6 million passengers with 7,000 employees.

And Ryanair's aircraft turnover rate is extremely high. Ryanair was able to complete the unloading, cleaning, stocking and reloading of an aircraft within 25 minutes. This may be the fastest in the industry.

This means Ryanair can complete eight flights in six hours, while other competitors can only complete six.

The original article can be found in Liu#9@书/吧!

After the 9/11 incident, security procedures caused the turnaround time to be slightly longer, but Ryanair still has the fastest turnaround speed in the entire aviation industry.

In addition, most Ryanair flights land at cheaper, second-tier airports, which reduces airport service costs, has faster turnaround times, and reduces missed flights (smaller airports are less crowded, so there is no need to wait or be delayed).

Ryanair has also moved bookings away from agents and onto its website, which does not require agency fees and does not require a central reservation system.

Ryanair is currently listed on the London Stock Exchange. The company's market value is about 8 billion pounds (equivalent to 13.2 billion U.S. dollars). However, it is still quite difficult to acquire the company as a whole.

Because the company's current shareholdings are very dispersed and its performance is good, if it wants to make an overall acquisition, it will inevitably need to give a certain premium...

But Barron didn't have any objections to this. After all, he remembered that by next year, Ryanair's stock price would rise sharply because its performance growth far exceeded expectations. Barron remembered that he had read relevant reports in his previous life. At the beginning of next year, From the beginning, by September, Ryanair's share price had risen by nearly 50%, and its market value was close to US$21 billion, ranking fifth among the global airlines in market value.