Ryanair in Cyprus Airways talks

Ryanair Chief Executive Michael O’Leary was due to travel to Cyprus on Thursday for talks with the government about the possible takeover of loss-making carrier Cyprus Airways, he told journalists.

Ryanair was among nearly 20 companies which last month submitted nonbinding expressions of interest in the airline, now controlled by the Cypriot government.

O’Leary’s announcement marked a change of approach as he had said last month that Ryanair, Europe’s largest budget airline, was not particularly interested in acquiring the carrier.

“We are engaged in the process and hope something will come of it. It’s a very political process down there,” he told a new conference in Dublin, adding that any deal would be small relative to Ryanair’s overall growth strategy.

Under his company’s proposal, Cyprus Airways would retain its brand and operate under a separate air operator’s certificate to Ryanair, he said.

The Irish airline will propose it could boost the airline’s passenger numbers to 3 million per year from 600,000 currently, down 50 percent from its peak, O’Leary said. Ryanair has only ever taken over one other airline, Buzz.

Cyprus Airways has struggled to survive against cheaper competitors and has been loss-making for years despite several attempts at a turnaround.

The airline has recently resorted to selling assets to stay afloat, including its slots at London’s Heathrow Airport.

It is also under scrutiny by the European Commission.

Brussels is investigating terms of a 31.3-million-euro capital increase in early 2013, and a 73-million-euro rescue package by the Cypriot state in 2012 to establish whether it violated state aid rules. [Reuters]