BA plan to buy Aer Lingus
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From Reuters
BA mulling bid for Aer Lingus -paper
Sun 18 July, 2004 12:52
DUBLIN (Reuters) - British Airways is mulling a possible takeover bid for Irish state airline Aer Lingus, BA's chief executive officer has been quoted as saying.
CEO Rod Eddington said BA would not make a move until the Irish government clarified its plans for the airline's future.
"But we'd certainly be an interested party," Eddington told Ireland's Sunday Independent newspaper, adding that he had asked bankers to work out how much any such buy-out might cost.
"Whether it would make sense for both parties to have an equity investment at some point, time will tell," the paper quoted Eddington as saying.
"My starting point it what the Irish government want to see happen. When we know the answer to that we'll be able to reflect on whether we'd want to participate or not."
Earlier this month, senior management at Aer Lingus asked the government for permission to seek financial backing for a buy-out of their own.
A three-man team comprising Chief Executive Willie Walsh and his chief financial officer and chief operations officer said it was confident "an attractive proposal could be developed and financed" if government consent was forthcoming.
If the government gave the nod to that request, the airline would effectively be on the market, with a bidding process being open to other potential buyers.
BA, like other airlines, has said it wants to see further consolidation in the European industry.
Aer Lingus, which has realigned itself under former pilot Walsh as a low-fare player after a brush with bankruptcy in 2001, has long been slated for sell-off.
It posted a stronger-than-expected operating profit last year of 83 million euros (55 million pounds), compared to an operating loss of more than 50 million in 2001.
BA mulling bid for Aer Lingus -paper
Sun 18 July, 2004 12:52
DUBLIN (Reuters) - British Airways is mulling a possible takeover bid for Irish state airline Aer Lingus, BA's chief executive officer has been quoted as saying.
CEO Rod Eddington said BA would not make a move until the Irish government clarified its plans for the airline's future.
"But we'd certainly be an interested party," Eddington told Ireland's Sunday Independent newspaper, adding that he had asked bankers to work out how much any such buy-out might cost.
"Whether it would make sense for both parties to have an equity investment at some point, time will tell," the paper quoted Eddington as saying.
"My starting point it what the Irish government want to see happen. When we know the answer to that we'll be able to reflect on whether we'd want to participate or not."
Earlier this month, senior management at Aer Lingus asked the government for permission to seek financial backing for a buy-out of their own.
A three-man team comprising Chief Executive Willie Walsh and his chief financial officer and chief operations officer said it was confident "an attractive proposal could be developed and financed" if government consent was forthcoming.
If the government gave the nod to that request, the airline would effectively be on the market, with a bidding process being open to other potential buyers.
BA, like other airlines, has said it wants to see further consolidation in the European industry.
Aer Lingus, which has realigned itself under former pilot Walsh as a low-fare player after a brush with bankruptcy in 2001, has long been slated for sell-off.
It posted a stronger-than-expected operating profit last year of 83 million euros (55 million pounds), compared to an operating loss of more than 50 million in 2001.
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I just don't see this being a runner. Firstly, there is - however much one may deny it - a political factor; Aer Lingus is very much a symbol of national pride and while that may cut no ice in the commercial world, a government already unpopular and with two years to run before an election, is not going to want to sell Aer Lingus to BA; a vast majority of public opinion would not have it and it's certainly something that could be whipped up by opposition parties. Sinn Fein, which has been successfully attacking FF's core vote in many constituencies would have a field day.
There will be concerns about Aer Lingus being used as slot fodder for BA.
However, the real question is what BA could bring to Aer Lingus. They are clearly huge differences between them. EI is going down the low cost route; BA is going the quality route and has a far bigger business/premium class base than EI. The two airlines work together in oneworld, but I don't see what synergies can be achieved by the two of them coming together.
There will be concerns about Aer Lingus being used as slot fodder for BA.
However, the real question is what BA could bring to Aer Lingus. They are clearly huge differences between them. EI is going down the low cost route; BA is going the quality route and has a far bigger business/premium class base than EI. The two airlines work together in oneworld, but I don't see what synergies can be achieved by the two of them coming together.
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Interesting that government has been musing about a mechanism to separate EI from its slots as a national resource that could not be sold but probably leased to carriers wishing to serve Ireland from LHR... have to say it makes sense at least until substantially more Asian, Australasian and American traffic has direct access to Ireland.
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I'm not sure how this would work, MarkD; for a start, only airlines can currently hold slots. That rule may change, but for the moment that's the way it is.
The slot issue is one of the issues being focused upon by the government and I am sure that if a BA bid were to get anywhere, rock solid assurances would need to be sought about the EI slots at LHR.
As for routes to Asia, I would have thought that one of the main objectives would be to reduce the reliance on LHR altogether; leasing slots to other carriers would probably not work. They would probably want them to increase their own slots and furthermore, is it actually in Ireland's interests to have most of the capacity on flights to Ireland taken up by UK bound pax.
The issue of EI's plan to develop long haul, low cost routes may be one which gives BA cause for concern. However, we could discuss this extensively, which takes us away from the crucial point: what could BA actually bring to EI? Could it invest money, in the long term. Would it, even if it could? Remember that the march of low cost carriers like EZY and of course RYR, is continuing and I think BA's resources may yet be needed for its own survival, rather than EI's. I just don't see BA as a natural partner for EI and I am uneasy about its intentions for the airline.
The slot issue is one of the issues being focused upon by the government and I am sure that if a BA bid were to get anywhere, rock solid assurances would need to be sought about the EI slots at LHR.
As for routes to Asia, I would have thought that one of the main objectives would be to reduce the reliance on LHR altogether; leasing slots to other carriers would probably not work. They would probably want them to increase their own slots and furthermore, is it actually in Ireland's interests to have most of the capacity on flights to Ireland taken up by UK bound pax.
The issue of EI's plan to develop long haul, low cost routes may be one which gives BA cause for concern. However, we could discuss this extensively, which takes us away from the crucial point: what could BA actually bring to EI? Could it invest money, in the long term. Would it, even if it could? Remember that the march of low cost carriers like EZY and of course RYR, is continuing and I think BA's resources may yet be needed for its own survival, rather than EI's. I just don't see BA as a natural partner for EI and I am uneasy about its intentions for the airline.
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Does Aer Lingus still have two companies (Aer Lingus and Aerlinte Eireann or something?)
Assign slots to Aerlinte Eireann. Lease slots to Aer Lingus. State retains all shares in Aerlinte Eireann. Transfer all Aerlinte assets to Aer Lingus and put Govt jet on Aerlinte civil AOC... sell Aer Lingus to Big Air.
Just thinking aloud, have no idea really.
How would Big ownership or part ownership affect EI access to US under bilateral?
Stefan S:
EI fleet: A332/A333, A320/A321 CFM engines
BA fleet: 747/767/777/757, B737 2nd G and A32x mostly IAE.
Biggest difference is long haul I suppose.
Could transfer the BCal CFM A320-100s to Aer Lingus for short hops (due shorter range than -200s) and take IAE engines on EI\'s on order 320s but I think plans may be too far along already.
Assign slots to Aerlinte Eireann. Lease slots to Aer Lingus. State retains all shares in Aerlinte Eireann. Transfer all Aerlinte assets to Aer Lingus and put Govt jet on Aerlinte civil AOC... sell Aer Lingus to Big Air.
Just thinking aloud, have no idea really.
How would Big ownership or part ownership affect EI access to US under bilateral?
Stefan S:
EI fleet: A332/A333, A320/A321 CFM engines
BA fleet: 747/767/777/757, B737 2nd G and A32x mostly IAE.
Biggest difference is long haul I suppose.
Could transfer the BCal CFM A320-100s to Aer Lingus for short hops (due shorter range than -200s) and take IAE engines on EI\'s on order 320s but I think plans may be too far along already.
Paxing All Over The World
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2md Post from Reuters quoting Eddington
Lucky that this is called the Rumour network. 
--------------------
"I tell you, we are here on Earth to fart around, and don't let anybody tell you any different." Kurt Vonnegut, Jr.
It has been announced that BA are in talks with Aer lingus for a planned take over.
"My starting point it what the Irish government want to see happen. When we know the answer to that we'll be able to reflect on whether we'd want to participate or not."
--------------------
"I tell you, we are here on Earth to fart around, and don't let anybody tell you any different." Kurt Vonnegut, Jr.
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Could it make sense...?
Two highly unionised carriers, merging, to form one big unionised blob.
Hey, why not?
Stranger things have happened in the airline world.
For example, just look at American Airlines.
They bought TWA...and thru good money after bad.
Could be a repeat on the eastern side of the Atlantic.
OTOH, there might be a marketing strategy in the making.
Hey, why not?
Stranger things have happened in the airline world.
For example, just look at American Airlines.
They bought TWA...and thru good money after bad.
Could be a repeat on the eastern side of the Atlantic.
OTOH, there might be a marketing strategy in the making.
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I doubt very, very, very seriously if this will ever happen due to a number of reasons. One primary reason would be the major problem that would develop with the bilateral agreement with the US.
The US would have a say in this due to the bilateral. There is no way the US would allow it as long as the SNN requirment is in existance and as long as LHR remains off limits to a number of US carriers. Period. End of discussion.
The US would have a say in this due to the bilateral. There is no way the US would allow it as long as the SNN requirment is in existance and as long as LHR remains off limits to a number of US carriers. Period. End of discussion.
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BA PONDERS BID FOR AER LINGUS
British Airways BAY.L is preparing to make a bid for
state-owned Irish airline Aer Lingus if the government puts it
up for sale in the autumn as expected. Rod Eddington, chief
executive of BA, said on Sunday: "We'd certainly be an
interested party. Ultimately, the Irish government is the core
owner and it is going to have to be the ultimate determiner of
what happens here." Ryanair RYA.I has also expressed interest
in a takeover bid for Aer Lingus.
British Airways BAY.L is preparing to make a bid for
state-owned Irish airline Aer Lingus if the government puts it
up for sale in the autumn as expected. Rod Eddington, chief
executive of BA, said on Sunday: "We'd certainly be an
interested party. Ultimately, the Irish government is the core
owner and it is going to have to be the ultimate determiner of
what happens here." Ryanair RYA.I has also expressed interest
in a takeover bid for Aer Lingus.
Stange this...
If you take a snapshot of the current situation then you could assume that EI would be a useful source of cash to BA, assuming they could structure the finance to make this viable.
On the other hand, taking an outsiders strategic view the only rationale I can see is BA containing a potential rival, ie they are afraid of allowing a major European rival access to EI slots etc.
Either way, BA consuming EI would be a bad thing. Their intention would be less than honourable in the long run.
If you take a snapshot of the current situation then you could assume that EI would be a useful source of cash to BA, assuming they could structure the finance to make this viable.
On the other hand, taking an outsiders strategic view the only rationale I can see is BA containing a potential rival, ie they are afraid of allowing a major European rival access to EI slots etc.
Either way, BA consuming EI would be a bad thing. Their intention would be less than honourable in the long run.
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Such a "marriage" makes sense on several levels.
If the Irish government truly wants out of the job creation business then it takes the political hit for whoever consumates it, not Aer Lingus' new owner.
BA gets the chance to protect its "back door", so to speak. It would also provide the option to use part of Lingus as it's lower fare unit.
No doubt MOL would be very agitated with this possibility. It might cause some of his friends in Dublin to reconsider their decision to sell EI.
As I see it DUB is the ideal connecting airport for some transatlantic traffic once the Shannon touch and go is removed.
As long as LHR is prevented from adding another runway (or three, which isn't going to happen) it makes sense to consider a reliever plan. Connecting some US-EU traffic through DUB instead of LHR would provide some extra capacity for BA at LHR to be used elsewhere.
If BA throws its hat into the ring Willie will have to find some more cash for the bidding war.
I hope IALPA and BALPA can work together on this.
Cheers, DD
FWIW, It wasn't the unions that made the decision to merge AA and TWA, it was the former CEO, Carty. Rather, the unions SAVED AA from bankruptcy.
If the Irish government truly wants out of the job creation business then it takes the political hit for whoever consumates it, not Aer Lingus' new owner.
BA gets the chance to protect its "back door", so to speak. It would also provide the option to use part of Lingus as it's lower fare unit.
No doubt MOL would be very agitated with this possibility. It might cause some of his friends in Dublin to reconsider their decision to sell EI.
As I see it DUB is the ideal connecting airport for some transatlantic traffic once the Shannon touch and go is removed.
As long as LHR is prevented from adding another runway (or three, which isn't going to happen) it makes sense to consider a reliever plan. Connecting some US-EU traffic through DUB instead of LHR would provide some extra capacity for BA at LHR to be used elsewhere.
If BA throws its hat into the ring Willie will have to find some more cash for the bidding war.
I hope IALPA and BALPA can work together on this.
Cheers, DD
FWIW, It wasn't the unions that made the decision to merge AA and TWA, it was the former CEO, Carty. Rather, the unions SAVED AA from bankruptcy.
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If the truth be known the Irish Government don't have a clue what to with EI for a number of reasons!
1. Election in two years....afraid to touch North Dublin with all the airport employees living nearby
2. Still reeling following the debacle that was the privitisation of Eircom - the national telephone company
3. Trying to break up Aer Rianta, without political fallout
4. Low cost terminal at Dublin
5. Still no resolution on bilateral
6. They still haven't decided what they're offloading, is it a loco, is it a flag carrier, is it conventional, is it everything to everybody?
7. What do they do with slots?
1. Election in two years....afraid to touch North Dublin with all the airport employees living nearby
2. Still reeling following the debacle that was the privitisation of Eircom - the national telephone company
3. Trying to break up Aer Rianta, without political fallout
4. Low cost terminal at Dublin
5. Still no resolution on bilateral
6. They still haven't decided what they're offloading, is it a loco, is it a flag carrier, is it conventional, is it everything to everybody?
7. What do they do with slots?
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At today's AGM of British Airways, both Rod Eddington and Sir Colin Marshall specifically said the BA are not planning to buy Aer Lingus. BA's prime financial commitment is to reduce it's debt, not to add to it!
Likewise, apart from the Shorthaul A321s starting to arrive in October, there are currently no plans to increase the all Boeing Longhaul fleet, as overall it is still quite young!
Likewise, apart from the Shorthaul A321s starting to arrive in October, there are currently no plans to increase the all Boeing Longhaul fleet, as overall it is still quite young!
