Rebirth of England.

Chapter 999 Airlines
"Our negotiations with Alitalia were not going smoothly. The Italian government did not respond positively to our request for layoffs and partial asset restructuring..."

Gerard Reynolds, CEO of the European Wealth Fund, told Barron’s:
"In addition to us, Etihad Airways has also expressed interest in Alitalia. The airline has always liked to expand its global network by acquiring equity in other airlines. This time they are ready to acquire 49% of Alitalia's shares."

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

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

Due to the company's low management efficiency, long-term high labor costs, and the continuous penetration of low-cost airlines such as Ryanair and EasyJet into the market, Alitalia has been in a long-term loss-making state since 2002.

In order to improve the company's financial structure and enhance operational efficiency, the Italian government began selling its shares in Alitalia in 2004.

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

Alitalia has been privatized since 2009.

Although the Italian government provided 5 million euros in aid to save Alitalia, the move still failed to reverse Alitalia's decline. The company once suffered a net loss of 150 million euros per day.

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

The Italian government then had to find new investors for Alitalia.

This is also the disagreement between the European Wealth Fund and the other party - the Italian side hopes to obtain funds for Alitalia to maintain its operations, but after evaluation, the European Wealth Fund team believes that Alitalia's poor management efficiency and high labor costs will not allow it to get out of its current predicament if it cannot carry out a certain degree of layoffs and asset restructuring.

If this is the case, then Alitalia will need to be acquired as a whole and then "transformed", but under the current circumstances, the Italian government does not want to cause employees to lose their jobs - after all, Italy's economy is still relatively sluggish, and they need jobs more to stabilize society.

"The Italian side has little objection to our proposed purchase price of 35 billion euros, but the only point is that they don't want us to lay off a large number of employees after taking over..."

Hearing what Gerard Reynolds said, Barron shook his head:
"If that's the case, then the only result is that our money will be put into the black hole of this company, which is not what we should do."

He asked instead:
“You said before that Ryanair and EasyJet are increasing their market share in Italy?”

"Yes, Your Highness, the statistics show that from 2008 to now, Alitalia's market share has dropped from 23% to less than 20%, while Ryanair's share in the Italian market has rapidly increased from 12% to 23%, and currently ranks first in the Italian airline market share..."

"Then contact Ryanair and see if you can acquire them."

Ryanair is an Irish airline founded in 1985. In the early 90s, in order to reverse the difficult operation of Ryanair, founder Tony Ryan sent O'Leary, then 26, to Dallas to learn from Kelleher, the founder of Southwest Airlines.

With the help of fine wine and cigars, the two chatted until late at night, and O'Leary finally got from Kelleher the keys to successful operations, including the importance of fast aircraft turnaround time, absolute attention to cost, and an operating model that uses the same aircraft model to simplify maintenance and training.

Since then, Ryanair has grown from one aircraft and 5000 passengers to one of the largest low-cost airlines in Europe today with its low-fare advantage.

"Ryanair currently has the highest profit margins of any airline in the world, even though they are reducing ticket prices..."

It seems that Gerard Reynolds had already done some 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 staff is very streamlined - generally there are only two "stewardess" on Ryanair's planes, while other airlines' planes generally have five "stewardess" on their planes.

2001年，瑞安用1500名员工成功运送了900万的乘客，而爱尔兰国家航空却用7000名员工运送了仅600万乘客。

In addition, Ryanair has an extremely high aircraft turnover rate. Previously, Ryanair could complete the unloading, cleaning, stocking and reloading of an aircraft within 25 minutes, which may be the fastest speed in the industry.

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

After 9.11/, security procedures increased turnaround times slightly, but Ryanair still has the fastest turnaround in the industry.

In addition, most of Ryanair's flights land at some cheap, second-tier airports, which reduces airport service costs, and has faster turnaround time and less missed flights (small airports are less crowded and there is no need to wait or postpone).

Ryanair also moved ticket bookings away from agents and onto its website, which does not charge agents fees and does not require a central booking system.

Ryanair is currently listed on the London Stock Exchange. The company's market value is around 80 billion pounds (equivalent to 132 billion US dollars), but it is still quite difficult to acquire the company as a whole.

Because the company's current shareholding is very dispersed, and its performance is good, if it is to be acquired as a whole, it must be given a certain premium...

But Baron had no objection to this. After all, he remembered that by next year, Ryanair's stock price would soar because its performance growth would far exceed expectations. Baron remembered that he had read related reports in his previous life. Starting from the beginning of next year, by September, Ryanair's stock price would have risen by nearly 9%, and its market value would be close to US$50 billion, ranking fifth in the world's airline market value.

(End of this chapter)