Ryanair's US service to cost up to €200m

Ryanair's new low-cost transatlantic airline could cost €100- €200 million to set up, chief executive Michael O'Leary said yesterday. However, he said that there was a huge appetite among investors, particularly Ryanair investors, to fund the venture which will be run separately from Ryanair.  Ciarán Brennanreports.

"Ryanair won't have any investment in this long-haul airline," he said. "There are a lot of investors who are very keen to see a long-haul, low-fares airline operate transatlantic services. If open skies goes ahead, based on aircraft orders in the middle of 2009, we could go out and raise €100 - €200 million. I think that would largely come from Ryanair shareholders or investors in London or New York, who had a good run on Ryanair. Raising the money is easy."

Mr O'Leary said he would expect the airline to be profitable from its launch, but added investment on this scale would be necessary for it to survive the first two to three years of operation.

Mr O'Leary said his exact role in the new airline would depend on the launch date and whether he was still chief executive of Ryanair at the time. "If it were set up before 2008/09, I would still be working for Ryanair, so we would have to put separate management into the company, but I imagine I will be involved in the set-up and fundraising for it," he said.

"The key thing is not to distract Ryanair management from running that airline."

Taking advantage of the recently negotiated open skies deal which opens up the market, the new airline would serve five or six destinations through secondary airports, such as Long Island in New York, Rhode Island in New England and Baltimore. Mr O'Leary said he expects the cheapest fare to be $12 (€10) for US passengers flying to Europe.

Several US airports have already approached the carrier about the plan, he said.

While the airline would be run as a separate company, Mr O'Leary said it would leverage Ryanair's credibility, contacts with manufacturers and access to cheaper airports. Combined with open skies, this would make the airline feasible in a way that was not possible in the past, he added.

"I think the economics never stacked up but the difference with this is it would run side by side with Ryanair," he said. "Because we have low-cost airports at this end and also in the US, we feel we could run a transatlantic operation far cheaper than anyone else, such as the legacy airlines which have huge costs and inefficient airports."

He said the launch of the new airline would have no impact on any future plans for Aer Lingus which operates four transatlantic routes. "Regardless of whether we buy Aer Lingus or not, we are still going to compete with Aer Lingus. "