RYANAIR is to buy its low-cost rival Buzz.

Ryanair will pay KLM-owned Buzz £15.6 million. However,
because Buzz has a cash reserve of £11 million, the net cost of the purchase is
just £4 million.

Ryanair plans to close Buzz’s non-profitable routes, while increasing
the frequency and reducing the cost of other routes.

Chief executive Michael O’Leary described the acquisition as
“opportunistic”.

He said: “Since Ryanair is growing strongly by rolling out
our lowest fare services all over Europe, the last thing we need is the
distraction of an acquisition.”

But he said there were a number of features of Buzz “which
makes this a favourable move at this time.”

Buzz and Ryanair have major hubs at Stansted. Buzz operates
21 routes from Stansted to Germany, Holland, France and Spain, as well as two
French domestic routes.

Ryanair plans to increase Buzz traffic this year from under
two million to over four million passengers.