Irelandia seeks equity partner to drive airline expansion ahead of flotation, writes Brian Carey
On his sparsely populated LinkedIn page, Declan Ryan, or “dec ryan” as he is listed, gives a rather curt current job description. “I go around the place/world looking for good people for Irelandia & our LCCs,” states the managing partner of Irelandia Aviation.
LCCs are low-cost carriers, and Ryan is likely to be looking for quite a number of “good people”. Irelandia Aviation is planning to create South and Central America’s largest low-cost carrier. It has 11 aircraft up and running in Colombia, and is planning to launch a service in Peru next year. It is also looking to establish operations in Costa Rica and Argentina. The target is an airline with a fleet of up to 100 aircraft.
Ryan, a son of the late Tony Ryan and a co-founder of Ryanair, last week said that Irelandia could spend “the next 20 years” in South and Central America.
It has designs on every country on the continent, with the exception of Brazil.
Irelandia has an enviable record in backing start-up low-cost carriers. Last week it reported a third straight exit, banking a reported $250m (€224m) for its 49% stake in VivaAerobus Mexico. It made a 400% return on its 10-year investment. Beneficiaries include extended members of the family, Shane Ryan, who runs a stud farm in America, and the estate of Cathal Ryan, whose beneficiaries include film producer Danielle Ryan.
Tigerair, based out of Singapore, was the family’s first airline investment outside of Ryanair since the ill-fated and short-lived London European Airways in the 1980s. Irelandia invested €1m in Tiger for a 16% stake in 2003, and ended up making €28m. In 2005, it invested $7.5m in Allegiant, a struggling Las Vegas airline, and within two years had sold its stake for $50m.
The sale of its 49% stake in VivaAerobus to fellow shareholder IAMSA, a Mexican bus company, is by far its biggest payday, and also heralds a shift in emphasis away from private equity-style investing towards building an airline group.
Under the terms of last week’s deal, it is understood that Irelandia will buy IAMSA’s 25% stake in low-cost carrier VivaColombia. Earlier this year, it acquired similar stakes from financial services company Grupo Bolivar and Grupo Fast, and will soon control 100% of the airline.
It is understood that Irelandia will now seek an equity partner to help drive its next phase of expansion through Grupo Viva, the Panama- registered holding company. Likely partners would include a pan-South American financial services firm, investment bank or industrial holdings group. The next stage will then be to float the business on the stock exchange, possibly within the next few years, observers say.
Ryan, 53, is the middle son of aircraft leasing pioneer Tony Ryan. He has more than three decades experience in the sector, first working for America West before returning home to join Ryanair.
He was briefly interim boss, before Michael O’Leary, a friend from his days at Clongowes Wood College, became chief executive in 1994. A board member for 18 years, he stood down in 2003 “to do other things”.
Within six months, Ryan led the family investment in Tigerair alongside Singapore Airlines and Indigo Partners, an investment fund headed by the Ryanair chairman David Bonderman and Bill Franke.
The opportunity in Latin America is to tap into the emerging middle-class appetite for travel. A bus journey in Colombia from Medellin to Bogota can take up to nine hours, compared with a 30-minute flight.
Ryan sees mobile phone penetration as a barometer of a potential market, and is known to visit retailers in person to gauge consumer demand.
He is said to be keen to launch in Venezuela, a country with close ties and good relations with Colombia. The company is believed to be at an advanced feasibility stage in assessing the Argentinian market.