Europe A-Buzz With Ryanair Growth

Enormously successful and growing rapidly, European low-cost carrier Ryanair today announced the purchase of Buzz, a rival discount carrier that had been owned and operated by KLM Royal Dutch Airlines. Ryanair also announced a new aircraft order for 100 Boeing 737-800 aircraft.

"Since Ryanair is growing strongly by rolling out our lowest fare services all over Europe, the last thing we need is the distraction of an acquisition," said Ryanair CEO Michael O'Leary. "However, there are a number of features of Buzz which makes this a favorable move." He cited the Buzz route network linking London Stansted Airport to 21 destinations in continental Europe and the "bargain" net cash cost.

The total Buzz transaction, valued at 23.9 million euro (US$25.8 million) but not expected to close before April 1, will be funded from parent company Ryanair Holding's "substantial cash reserves without any recourse to the markets." Because Buzz is expected to have 19 million euro (US$20.5 million) in cash when the transaction closes, Ryanair said the net cost is just 5 million euro (US$5.4 million).

Meanwhile, Ryanair this week announced an order for 100 additional Boeing 737-800s to be used to grow operations and refresh the Buzz fleet. The new order includes 22 firm orders and 78 options, in addition to 103 previous firm orders. The carrier said its fleet by the end of the decade will total 250 B737-800s, making it "the youngest aircraft fleet in Europe and the second largest operator of the most successful jetliner in the world, behind Southwest in the U.S."

Earlier this week, Ryanair confirmed plans to expand services at Stockholm Skavsta Airport. The carrier this April will offer more than 30 daily flights from its ninth base of operations.

Ryanair currently serves 100 destinations in 15 countries and expects to log a 35 percent annual increase in passengers carried when its fiscal year ends on March 31. It already is the fourth largest international carrier in Europe and anticipates the new aircraft order will propel it into the top position.

That expansion, along with impressive growth by fellow low-cost carrier and rival EasyJet, has forced several traditional network carriers in Europe to slash fares across the continent in order to remain competitive.