O’Leary heads east with Cyprus Airways bid

Ryanair Holdings Plc will submit a non-binding offer for Cyprus Airways tomorrow as Europe’s No 1 discount carrier seeks to extend its footprint eastward to an island increasingly popular with Russian and Israeli visitors.

Ryanair has emerged as one of a “handful” of interested bidders for the state-owned business after chief executive Michael O’Leary met with Cyprus’s transport minister last week, chief marketing officer Kenny Jacobs said. “We’ve had a positive meeting on both sides and we think there is a good business there to take over,” Jacobs said in an interview. “It gives us access to a really interesting part of Europe that’s going to grow and that part of Europe is easily connected to the Middle East, which is also interesting.”

A more detailed data-collection process will begin if the Cypriot government approves the Ryanair offer, and it could take a “couple of months” to prepare a binding proposal, Jacobs said. A takeover would be only the second in Ryanair’s 29-year history following the 2003 purchase of low-cost carrier Buzz, with O’Leary preferring to enter markets after the demise of local airlines rather than bail them out.

Some 382,000 people visited Cyprus in July, up 5.7% from 2013, according to the Mediterranean island’s statistical authority. Israeli arrivals surged 63% and Russian visits rose 21%. Tourism accounts for more than a fifth of the economy, according to the World Travel & Tourism Council.

Founded in 1947, Cyprus Airways operates scheduled flights to about a dozen destinations in Europe and the Middle East using a fleet of six Airbus Group NV A320 aircraft, according to its website. The carrier attracts about 1.3 million passengers annually and is almost 94% government owned.

O’Leary’s only deal beyond the €20.1m purchase of Buzz from KLM Royal Dutch Airlines NV was a minority investment in Aer Lingus.

European antitrust authorities blocked a full takeover and Britain’s Competition Commission has ruled that the stake must be sold down.

Ryanair and UK rival EasyJet Plc are expanding as network operators, including Deutsche Lufthansa AG and British Airways parent International Consolidated Airlines Group SA seek to re-invent their short-haul units along low-cost lines.

- Bloomberg