What are Ryanair up to with Wizzair?

It is not unusual for Ryanair to knock competitors so the recent attacks on Wizzair are hardly a surprise but I wonder if there is some big plan behind their current campaign or if it is just another shoot-from-the-hip escapade which might back-fire.

With the bankruptcy of Malev, both Wizzair and Ryanair have been announcing new routes from Budapest. Normally, budget airlines like to steer well clear of each other but, this time, Ryanair and Wizz are head-to-head against one another.

Wizzair has moved fastest, as is only to be expected. It has an established base in Budapest and so increasing services is not a big issue.

Ryanair has launched a flurry of publicity attacking Wizzair on two fronts. Firstly, they are publicising figures which appear to show the company is losing money. Secondly, they have lodged a complaint with the EU about the ultimate ownership of Wizz, claiming it does not qualify as an EU carrier.

This could do Ryanair more harm than good in the Hungarian market. The Hungarians are fiercely patriotic and are not pleased at the demise of their flag-carrier. Wizz is, officially, a Hungarian airline and certainly employs many Hungarian staff. Will the Hungarian public be impressed by a foreign company trying to bad-mouth its last remaining airline and a major local employer?

Wizz’s ownership and its profit or loss are definitely complicated. There are numerous holding companies in Malta and Switzerland and mysterious shareholders. The company has never really come clean about who owns it and divulges the bare minimum of information on its financial performance. With so many intermediate holding companies, it is quite possible that the company is actually highly profitable and money is merely being tucked away somewhere. Or maybe the same mechanism is being used to disguise much bigger losses. Who knows?

Well, Ryanair might just know a little bit more than they are letting on.

Rumour has it that one of Ryanair’s larger shareholders is (or, more likely, was) a shareholder in Wizz. 

The current campaign against Wizz is either more of the usual Ryanair publicity-seeking nonsense or an altogether more Machiavellian game. Whichever way, it could still rebound on them rather badly.

In June’s Inside Traveller

The June edition of Inside Traveller is now available by mail and on-line. Amongst the subjects this month are:

• Virgin Atlantic and its new A330s. A story of ineptitude which shows just how desperately the airline needs new ownership and proper management.

• The secret behind the enormous success of the W hotel brand.

• More on the sorry story of von Essen Hotels.

• Is it worth a cuddle on Air New Zealand?

• Should you even think of flying with Tiger in Australia?

• Have Wizzair trumped the rest of the budget airline industry with their new product?

• How to stop the loss of a passport becoming a financial nightmare.

• Is there any point in using www.cheapflights.co.uk?

• Another stunning own-goal from easyJet. Do they really have a clue what they are doing?

If you are not already a subscriber, visit insidetraveller.co.uk.

Betting on the next bust airline

The Irish bookmaker, Paddy Power, are well known for their rather unusual speciality bets and, for a couple of years now, they have been running a book on the next airline to close due to financial failure. Globespan was always high on the list but in the last few weeks the price dived. There is no “hot favourite” on their list at the moment but the leaders are Wizzair at 4/1, Finnair at 9/2 and Malev at 5/1.

We would not suggest using their prices as a guide to the strength of an airline because their market-makers seem to have some very strange ideas.

Finnair is 55%-owned by the Finnish government and is regarded as a national asset which is vital to the independence of the country. Whilst it has had a recent dispute with its pilots and needs to improve its figures, its results over the last few years have been better than many other airlines. It is hard to imagine the Finnish government allowing a semi-state company and strategic asset to go bankrupt.

Wizzair is a privately-owned company (in fact, it is run as a group of individual companies which operate from the different bases of the airline). The company has been very secretive about its finances though it appears that the original part of the airline is just about profitable whilst some of the newer subsidiaries are loss-making. This is hardly a suprise so, on the face of it, they appear healthy enough but until they are much more open about their finances, rumours will persist. They might well be in much better shape than is generally thought but, equally, their sudden demise would not be a major shock.

There is a definite question-mark over Malev but some of that is due to the behaviour of its Russian shareholders. The company was bought by a Russian company which went bankrupt leaving the airline partially under the control of a Russian bank. The Hungarian government has been giving the airline a helping hand but they would very much like to find a new and secure home for the airline. It seems unlikely that the Hungarian government would just walk away, especially since the airline itself appears to be getting closer to some form of recovery, but it is not impossible.

Most of the other quotes on the list are laughable but 8/1 for the small Irish regional airline Aer Arann appears tempting. A small, regional airline in a country with an economy in dire straits is, on paper, a very likely candidate for financial trouble, however well-managed it might be. The problem is, we can’t see an Irish bookmaker making a mistake on an Irish airline…