Business Accounting Project
Case study: Aer Lingus and Ryanair – wings apart!
TO: World Airlines business magazine
From: Alicia PARTENSKY
Subject: Aer Lingus and Ryanair – wings apart!
Date: September 2011
Aer Lingus and Ryanair are two big Irish airlines and both of them have grown up recently. Here I will explain you how they have grown and the differences between these two companies. As a matter of fact they haven’t the same strategy.
First of all, these two companies have a different past, which explains this fact. Aer Lingus was found in April 1936, and the first flight was in May 1936 from Dublin to Bristol, England. In second time, Aerlínte Éireann was found in 1947, which has made competition for Aer Lingus. But in January 1960 Aer Lingus and Aerlínte Éireann became Aer Lingus – Irish International Airlines because of their melting. Then, Aer Lingus was in trouble because of the concurrence of Low cost like Ryanair in 2001 , and because of that they tried to be International . In October 2006, Aer Lingus became an Irish and London Stock Exchanges, which made a good publicity for this airline. Now, Aer Lingus is serving more than 80 destinations in Europe and the USA and Dubai. As regards to Ryanair, it was found with only a capital £1 and a staff of 25 by the Ryan Family in 1985. The Ryan brothers have invested £20 million in order to save the company in 1989. In 29 May 1997, Ryanair became a public company including in Dublin and NASDAQ stock exchanges. In January 2000, Ryanair has made his own website: www.ryanair.com, and it was a clearly success because in only 3 months the site has taken 50 000 booking per week. Now, Ryanair serves more than 44 bases.
The ownership of these companies is important. These two companies have different ownerships. In fact Aer Lingus is still owned by the government of Ireland because the government owned 25.11% of the airline. Before the government owned 85% but Aer Lingus was privatized in 2006. The principal rival of Aer Lingus, Ryanair owned 29.82% of Aer Lingus; it can explains why Ryanair would like to control Aer Lingus. Aer Lingus employees owned 14% of the airline. After government approval, the airline was introduced on the London and Dublin Stock Exchanges since the day of the 2 October 2006. All this shows that Aer Lingus is strongly held by Ryanair, however, it would be better now if companies like Air France, Lufthansa or British Airways held shares of Aer Lingus because these companies are known as international airlines. But Ryanair as a different organisation for his ownership, in fact, is different as we can see here: | Shareholders |
|- Capital Research and Management Company |13,24% | |- Gilder Gagnon Howe & Co |5,19% | |- Mister Michael O Leary |4,06% | |- FMR LLC |4,40% | |- FIL Limited |4,22% | |- Chieftain Capital Management |3,58% |
We can also see that the Chief Executive Michael O Leary is the owner of 4,06% of Ryanair. Now, Ryanair and Aer Lingus are both public and they hold together 70 % of the Irish airline market.
We can also observe two different business strategies between Aer Lingus and Ryanair. The business strategy of Aer Lingus has 6 important points:
1 - Low cost of travelling.
2 - An ability that develops...