Aer Lingus - 6

[racedo]

You are correct the OFT has no teeth it cannot force Ryanair to sell its stake in AerLingus. If it finds however that Ryanair has exerted de facto influence over the company then it can refer the matter to The Competions Authority. They have lots of teeth. Ask the BAA or Ferrovial if they wanted to sell Gatwick Airport.

BAA is a UK entity and it was forced to sell.

OFT has no teeth regarding Irish companies and when it tries it will find UK companies getting hauled into other juristictions.

Ryanair has already exerted influence at board level in Aerlingus by blocking Share issues on more than one occasion and blocking possible fleet changes. This was done during each AGM the company has had by Ryanair using its stake to block the special resolutions neccessary to effect these changes.

Eh ?

Shareholders have a right at an AGM to consider what is best for their investment.

Given the management of Aer Lingus over the last number of years in blowing hundreds of millions in its failed strategy after failed strategy then its hardly surprising support wasn't forthcoming.

That however is not exerting influence as having less than 30% of the shareholding and being consistently outvoted is not having "INFLUENCE".

AGM are not there just to rubber stamp whatever the board want to do no matter how idiotic.

[dublinaviator]

Originally Posted by 840

That is the business of the UK government as the UK government is perfectly entitled to take a stand on ownership that could give dominance over the routes from the UK to one of it's most important trading partners.

Between them Ryanair and Aer Lingus account for about 90% of UK-Dublin flights and the percentage is even higher for Irish regional airports.

I'm sorry but how is it the UK's business if 2 Irish companies decide to merge? Whats stopping any British airline giving them competition?

Originally Posted by punchus

Dublin Aviator:
You are correct the OFT has no teeth it cannot force Ryanair to sell its stake in AerLingus. If it finds however that Ryanair has exerted de facto influence over the company then it can refer the matter to The Competions Authority. They have lots of teeth. Ask the BAA or Ferrovial if they wanted to sell Gatwick Airport.

The BAA was a British company who controlled British airports. Ryanair and Aer Lingus are Irish companies. Neither the UK OFT or the Competitions Authority in the UK have the right or jurisdiction to rule that 2 Irish companies cannot merge.

Originally Posted by punchus

Ryanair has already exerted influence at board level in Aerlingus by blocking Share issues on more than one occasion and blocking possible fleet changes. This was done during each AGM the company has had by Ryanair using its stake to block the special resolutions neccessary to effect these changes.

Ryanair hasn't blocked any fleet changes by Aer Lingus. If only they did, because Aer Lingus are now tied into a contract to buy A350s which are way too big for them.

Also the only resolution I can think of which they've blocked was one which would've diluted their shares, and they had every right to do that.

Originally Posted by punchus

Ryanair and Aerlingus compete on a number of city pair routes between Ireland and UK. The European Competitions Committe has already found that there would be reduced competition on these routes if a merger was allowed therefore the OFT has a right to probe the matter. This has already been ruled on by the UKs Court of Appeal.

The UK's OFT isn't investigating the impact of a merger between the 2 airlines. Both the European Commission and the European Court of Justice have already ruled that the 2 airlines can't merge. What the UK OFT is probing is the impact of Ryanair's stake in Aer Lingus. But considering the ECJ has already ruled that Ryanair can keep it's stake in Aer Lingus, its a pointless probe and a complete waste of UK taxpayers money.

Originally Posted by punchus

So Mr Fingleton has a lot more power than he would appear. Lets wait and see what happens. Perhaps O'Leary protests too much because he sees the writing on the wall.
Lets hope so!

There is no writing on the wall. The European Court of Justice has already ruled that Ryanair can hold it's stake in Aer Lingus. Thats the end of it, you can't go any higher.

[punchus]

[QUOTE]That however is not exerting influence as having less than 30% of the shareholding and being consistently outvoted is not having "INFLUENCE"./QUOTE]

Under Aerlingus Articles of incorporation to pass a special resolution you need greater than 75% of the votes. Ryanair can block all of these resolutions with its stake and therefore exerts influence on the company now and has done in the past. Its presence on the register serves to depress share price and stifle any further company strategies that do not fall in with Ryanairs' plans.

[racedo]

Under Aerlingus Articles of incorporation to pass a special resolution you need greater than 75% of the votes. Ryanair can block all of these resolutions with its stake and therefore exerts influence on the company now and has done in the past. Its presence on the register serves to depress share price and stifle any further company strategies that do not fall in with Ryanairs' plans.

Wrong.

To exert influence on a company is to influence it to do things rather than the other way round.

The idea that presence of Ryanair on the register is depressing share price is laughable in the extreme.

The actions of a number of CEO's and crass management aided and abetted by Unions is what has driven the share price downward as Aer Lingus dreams up stupid strategy after stupid strategy to blow hundreds of millions in €.

Having Europe's most successful airline over last 10 years on your register isn't going to depress price.

[840]

The British bodies can make a decision on an issue involving Irish companies because it affects the supply of services in the UK.

Imagine that the British Vodafone and Spanish O2 decided to merge. Do you think the Irish regulatory bodies would be entitled to look at a merger that would create a company with 85% Market share in Ireland?

BTW The BAA was Spanish owned by the time the enforced sales was implemented.

[racedo]

BTW The BAA was Spanish owned by the time the enforced sales was implemented.

Course it was as there was never a competition issue with UK airports when BAA was British owned, day after it was bought by Ferrovial the were huge competition issues.

[Lord Lardy]

From the Indo

Saturday September 03 2011


AER Lingus is likely to generate almost double the previously anticipated level of operating profits this year and in 2012 as its margin and mix of business improves, according to Merrion Capital. Analyst Gerard Moore yesterday significantly upgraded his forecasts for the airline following the release this week of its interim results. He said that this year Aer Lingus should generate an operating profit of €32.6m, implying a margin of about 2.5pc. That compares to his previous estimate of €17.5m.

[EI Premier]

From the Indo

A very optimistic forecast and one that's looking increasingly unlikely given the current environment. Q4, in particular, will quite likely be weaker than is perhaps anticipated as contraction feeds into real economic consumption. More vigirous discounting will quite likely be necessary, affecting Total Revenues.

In the end, the bottom line is the most important component and EI will quite likely have several Exceptional Items for the Full Year.

This investigation by the UK OFT is just another paperwork exercise to justfiy the existence of yet another Quango. No matter what their findings and any subsequent forced implementations, the private/free market will always find a way to override them if they are economically unfeasible.

EI Premier

[EI-BUD]

According to Irish Air Letter - latest issue, it reported that some source had stated that Aer Lingus is looking at regional jets for delivery in the next 2 years, mentioned Embraer and C Series, and apparently C Muller had said he thinks C Series is a fantastic concept, and given that LH will have it tried and tested that will give them a chance to see how they get on with it, he also said that given that the aircraft is partially made on the Island of Ireland, they would give it close consideration.

EI-BUD

[vkid]

anyone hear Varadkar on newstalk this morning? Sounds like the 25% is back on the market, pretty much said after review they don't consider it strategic anymore, but nothing written in stone, not yet fully decided etc etc.. Didnt seem to rule out selling airports or terminals either.

Clip might be online later


edit : Varadkar considering sale of Government stake in Aer Lingus | BreakingNews.ie

[840]

I can't really see the point.

Ryanair aren't allowed to buy it.

No other airline is going to want it when Ryanair would be an even larger shareholder.

And by pre-announcing it in this way, they'll drive down the price they can get anyway.

[vkid]

What would 25% of EI make these days anyway? The Ryanair stake would surely put off any buyers but the IMF/Eu are calling the shots and sales of state assets is part of that.

[Just a spotter]

IMHO, the Ryanair stake will be just one more reason, amongst a number of significant other reasons, why Aer Lingus is not that attractive as a buy for another airline, but it would not be a serious impediment to making it 'a buy' to professional investors.

The big problem would be a sale to any firm that would be inclined to asset strip or look for very quick returns on its investment.

Despite the structure of share holding, excluding the State's stake, and the long tradition of a somewhat fractious nature to management/union relations, EI has a decent chance of a being a long term, profitable operation, all be it as a relative minnow in the airline sector.

JAS

[EI Premier]

What would 25% of EI make these days anyway?

A gross figure of south of EUR 100 million given the current share price and well south of EUR 100 million if the most recent 30 day average is used.

The big problem would be a sale to any firm that would be inclined to asset strip or look for very quick returns on its investment.

This would be my precise worry. EI is currently more attractive in terms of accumulated asset holdings rather than potential earnings.

EI Premier

[840]

It seems Ryanair are also willing to sell now.

That would make Aer Lingus a more attractive target for another airline.

But who?

[JSCL]

Sell BMI, buy EI, roll on LH?

[PPRuNeUser0176]

Ryanair Statement on Aer Lingus

[Just a spotter]

OK, calm down everyone.

Before any wild speculation as to 'possible' suitors for Aer Lingus, can someone please outline a list of the benefits to any major in the purchase of EI? Because, for the life of me, I can't see too many. At best, it is a small regional, with a small, well served and very competitive home market that is experiencing a recession and contains no significant traffic hub, internal unions that on occasion will impact on operations and is staring at significant further provisions for its pension scheme. The airline is already an established feeder from its home market to all the major European hubs as well some US gateways.

Now, for an LH, IAG, KLM/AF or similar of this world, what's the upside? No US carrier is a likely buyer. Maybe a Gulf player with 'more money than sense' might take a look, but I doubt it. A merger with a couple of smaller players might make sense, at a stretch, but then who?

As ever, I'll defer to the Pprune-Parish-Brains-Trust.

JAS

[EI-BUD]

Just a spotter, I see your point re who would have interest; I think BA could certainly be a front runner if any. The rumours were last year that EI was destined for an Alliance, if it was Star Alliance, would this jeopardise the strong feed of traffic into LHR with EI to the BA network. BA put signifcant worth on this Irish originating traffic.

Aside from this is could well be a personal objective of Willie Walsh to see EI under the IAG umbrella first to secure that interline traffic but also to develop the brand further, EI has come through the worst of times at the height the recession with FR stronger than ever. EI has alot of opportunities firstly increase transatlantic operation and transfer opportunities, opportunity to grow Aer Lingus Regional and also to exploit a strenght that could exist, serving high frequency routes with a smaller e jet for eg this could be good against FR on thin routes that could drive good business fares.

EI-BUD

[Jamie2k9]

If EI was sold at the current share price its only worth about €83 million (RTE news). Thats nothing to what EU/IMF want.

Think it will not be sold this year. ESB and other larger assits will be gone before it.