Ryanair - 3
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Cometh the hour, cometh the man.
Three things.
1. Open Skies Cometh
2. Heathrow Slots
3. Ryanair Atlantic and those persistent 777 rumours.
All the rest is padding. Or, as JM Brown of the FT wrote this morning...
Oh, and Sunfish, you might care to have a look here or if, as I suspect, you prefer you stories in pictures, then here before embarrassing yourself further with your hokey, irrelevant south seas prognostications. Two point two nine Billion €uros cash in the bank is enough to be going on with, wouldn’t you say?
1. Open Skies Cometh
2. Heathrow Slots
3. Ryanair Atlantic and those persistent 777 rumours.
All the rest is padding. Or, as JM Brown of the FT wrote this morning...
Mr O'Leary's chummy disposition belies a brilliant but often ruthless business brain. No-one can question his achievement in transforming Ryanair from an airline carrying 4m passengers in 1998 to one carrying more than 40m this year. What's more, low cost is now the favoured model for almost all short- haul services. The proposed takeover, Mr O'Leary argued, is in line with other European consolidation, and therefore should not trigger a regulatory challenge. Where the proposed deal is unusual is that it is a low-fares operator that is acquiring the flag-carrier, not the other way around.
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I don't really think that's a runner; it would be an admission of defeat, but more to the point, not good for Aer Lingus at all.
There is another reason for thinking it's not a good thing. Here's a statement made by the minister for transport this evening. Now, I really don't like to criticise people, but, well, just have a read through the link and see what you think. I've picked out a few salient points to focus on ...
http://www.breakingnews.ie/2006/10/06/story279934.html
1. Government's and Ireland's strategic objectives not well served.
(What strategic objectives? Are these strategic objectives served by letting the DAA have a free hand at Dublin Airport, by having no investment in cargo handling, by turning their face against competition at the airport, by maintaining an outdated and counter-productive bilateral with Canada, by not having any meaningful co-ordination between govt departments - where do I stop ....)
2. Government kept 28% precisely to block such a hostile takeover bid and the delisting of EI from the S.E.
(Er ... how exactly does 28% shareholding, without a golden share, actually achieve this?)
3. It's a defensive move by Ryanair to protect itself from a stronger, well resourced Aer Lingus.
(Yeah right, because tiny, delicate Ryanair with the lowest costs in the industry and a whacking great fleet of 737s is really going to need protection from EI.)
Did you ever read such BS in all your life? To whom is this drivel intended. Would it have crossed his mind that when investors and analysts read something like this, their most immediate thought may be "if anyone needs protection, it's Aer Lingus, from this guy. What planet is he on?".
Sometimes you're not sure whether to laugh or cry.
There is another reason for thinking it's not a good thing. Here's a statement made by the minister for transport this evening. Now, I really don't like to criticise people, but, well, just have a read through the link and see what you think. I've picked out a few salient points to focus on ...
http://www.breakingnews.ie/2006/10/06/story279934.html
1. Government's and Ireland's strategic objectives not well served.
(What strategic objectives? Are these strategic objectives served by letting the DAA have a free hand at Dublin Airport, by having no investment in cargo handling, by turning their face against competition at the airport, by maintaining an outdated and counter-productive bilateral with Canada, by not having any meaningful co-ordination between govt departments - where do I stop ....)
2. Government kept 28% precisely to block such a hostile takeover bid and the delisting of EI from the S.E.
(Er ... how exactly does 28% shareholding, without a golden share, actually achieve this?)
3. It's a defensive move by Ryanair to protect itself from a stronger, well resourced Aer Lingus.
(Yeah right, because tiny, delicate Ryanair with the lowest costs in the industry and a whacking great fleet of 737s is really going to need protection from EI.)
Did you ever read such BS in all your life? To whom is this drivel intended. Would it have crossed his mind that when investors and analysts read something like this, their most immediate thought may be "if anyone needs protection, it's Aer Lingus, from this guy. What planet is he on?".
Sometimes you're not sure whether to laugh or cry.
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DM spoke on RTEs news programme tonight with the following mantra....
"They[investors] like the Aer Lingus value proposition, we are different to other LCC's, we offer a better product and there is a premium associated with that[service] and thats the key to growing Aer Lingus going forward"
Thats all very well, but what line did EI spin to its investors a few months back? They must be planning something monumental in terms of expansion if the indications from the institutions are that they want to hold on for a bigger payoff. Institutional investors are a fickle lot, if they hang on it firmly indicates that A/C orders are in the bag already and plans drawn up for their deployment.
DMs speech today is a totally diferent use of language to previously, EI is focusing on service again, and its quite clear that they are prepared to do their own thing in terms of service concepts...
In a way FR has just made it easier for EI to expand, now that it has better stock market capitalisation EI is more likely to be able to find cash for A/C, etc on better terms.....
Interesting times ahead methinks. Im inclined to think that it is a win-win situaion for both EI and MOL/FR.
"They[investors] like the Aer Lingus value proposition, we are different to other LCC's, we offer a better product and there is a premium associated with that[service] and thats the key to growing Aer Lingus going forward"
Thats all very well, but what line did EI spin to its investors a few months back? They must be planning something monumental in terms of expansion if the indications from the institutions are that they want to hold on for a bigger payoff. Institutional investors are a fickle lot, if they hang on it firmly indicates that A/C orders are in the bag already and plans drawn up for their deployment.
DMs speech today is a totally diferent use of language to previously, EI is focusing on service again, and its quite clear that they are prepared to do their own thing in terms of service concepts...
In a way FR has just made it easier for EI to expand, now that it has better stock market capitalisation EI is more likely to be able to find cash for A/C, etc on better terms.....
Interesting times ahead methinks. Im inclined to think that it is a win-win situaion for both EI and MOL/FR.
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As stated by Mr Cullen you can not take EI private if the company is 28% state owned and they don’t want to sell. That is the story full stop. You can make it very difficult for a company to operate though!
There isn't any way FR can take it private if the government dig in, never mind the employees and other investors.
"The Minister claimed it's a defensive move by Ryanair to guard against the threat of a stronger well-resourced Aer Lingus and Ryanair is trying to recreate an aviation monopoly."
I think this is partially right and is economic and a bit of an ego mission mixed together. There are more important issues on the agenda. EI are pushing FR finally in a different manner of ways to previously but not as much as EI would want or could achieve…..
The potential of LHR slots is not the main consideration in the short or medium term either, it is a factor though. I know there are investment analysts looking at this thread especially when this particular issue comes up. These slots have been safe guarded for quite a while as previous posters have stated in their evidence and links! This is not one of the primary reasons in this takeover.
The ego thing is something that is a consequence of a business deal like this and you can be sure there is a certain amount of satisfaction going on about this. I don't think this is the main reason either.
People are underestimating the value of Dublin slots in all this! This is the "Tiger economy" of Europe at the moment. There has been quite a bit of heavy discussion that went on about this with a few court rulings over the past few months which I thing people have missed in all of this.
Long haul is something FR wants to get involved in and out of DUB and the purchase of EI will enable this in many ways, ETOP'S approval under a seperate AOC etc. The special links between the US and EI have been around for years and if open skies came to fruition FR would want a bite of that cake which might be easier than many other European countries to negotiate.
Linking all the major UK(name a city FR don't serve in the UK), Irish and other European cities up to DUB to serve transatlantic services is and I think would have already been an objective. No Interline agreement though. Just a % off a DUB-JFK if you have used FR inbound and outbound from DUB, maybe? Who knows... but you can sell anything at the right price.
The LHR slots have a multi purpose in either being for sale or use by a long haul FR.
Qualified man power is another factor, unions or not unfortunately. KLM UK can vouch for this! A few hundred qualified pilots is always something FR would be looking to get hold of. They think that the unions can be strangled to accept any deal FR will offer in the end of a prolonged strategy to shut down EI.
BA and Virgin and the other major US carriers as a whole should be and I think will be worried at the current course of events.
This company has to spend the money they have though. A dividend was about due. 2 BN Euro and no dividend and people would have to be asking questions on what and are the reasons as to no dividend as the company maintained unprecedented growth. Instead of "wasting cash" on paying back shareholders on their financial backing (Boeing, banks and lease backs cash included), the money is to be spent on basically further expansion. I am and would be asking major questions to why FR are not paying dividends when they are a huge PLC with huge profit margins and plenty in the bank. Why are the CEO and board keeping your money? This is after all your money FR is using to buy EI!
I think he will enjoy spending it. You always do if it isn't yours! Not so much to lose...
There isn't any way FR can take it private if the government dig in, never mind the employees and other investors.
"The Minister claimed it's a defensive move by Ryanair to guard against the threat of a stronger well-resourced Aer Lingus and Ryanair is trying to recreate an aviation monopoly."
I think this is partially right and is economic and a bit of an ego mission mixed together. There are more important issues on the agenda. EI are pushing FR finally in a different manner of ways to previously but not as much as EI would want or could achieve…..
The potential of LHR slots is not the main consideration in the short or medium term either, it is a factor though. I know there are investment analysts looking at this thread especially when this particular issue comes up. These slots have been safe guarded for quite a while as previous posters have stated in their evidence and links! This is not one of the primary reasons in this takeover.
The ego thing is something that is a consequence of a business deal like this and you can be sure there is a certain amount of satisfaction going on about this. I don't think this is the main reason either.
People are underestimating the value of Dublin slots in all this! This is the "Tiger economy" of Europe at the moment. There has been quite a bit of heavy discussion that went on about this with a few court rulings over the past few months which I thing people have missed in all of this.
Long haul is something FR wants to get involved in and out of DUB and the purchase of EI will enable this in many ways, ETOP'S approval under a seperate AOC etc. The special links between the US and EI have been around for years and if open skies came to fruition FR would want a bite of that cake which might be easier than many other European countries to negotiate.
Linking all the major UK(name a city FR don't serve in the UK), Irish and other European cities up to DUB to serve transatlantic services is and I think would have already been an objective. No Interline agreement though. Just a % off a DUB-JFK if you have used FR inbound and outbound from DUB, maybe? Who knows... but you can sell anything at the right price.
The LHR slots have a multi purpose in either being for sale or use by a long haul FR.
Qualified man power is another factor, unions or not unfortunately. KLM UK can vouch for this! A few hundred qualified pilots is always something FR would be looking to get hold of. They think that the unions can be strangled to accept any deal FR will offer in the end of a prolonged strategy to shut down EI.
BA and Virgin and the other major US carriers as a whole should be and I think will be worried at the current course of events.
This company has to spend the money they have though. A dividend was about due. 2 BN Euro and no dividend and people would have to be asking questions on what and are the reasons as to no dividend as the company maintained unprecedented growth. Instead of "wasting cash" on paying back shareholders on their financial backing (Boeing, banks and lease backs cash included), the money is to be spent on basically further expansion. I am and would be asking major questions to why FR are not paying dividends when they are a huge PLC with huge profit margins and plenty in the bank. Why are the CEO and board keeping your money? This is after all your money FR is using to buy EI!
I think he will enjoy spending it. You always do if it isn't yours! Not so much to lose...
Last edited by alibaba; 6th Oct 2006 at 22:00.
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People are underestimating the value of Dublin slots in all this! This is the "Tiger economy" of Europe at the moment.
If the Dublin slots are so valuable, how come Alitalia have just pulled out?? And if RYR/EIN goes ahead, you can bet a number of others will pack their bags too.
The Mannion interview on RTE1 News was indescribably bad - yet another corporate clone droning the same old biz-speak - if he's in charge Aer Lingus have no chance.
I am now wondering if MOL is not doing this to expand his business but rather his usual mischief-making: he's got a massive amount of free publicity, people admire his 'chutzpah', and if it doesn't succeed, he makes a monster profit on the EIN shares for doing nothing.
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In a statement to the sharemarket the Irish Govt. says it holds 25.1% of the EI shares, which will block a complete takeover by any single party, as they need 75% for control.
Blue Foot
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I didn't see DM's interview, but I don't think Alitalia is a particularly good example to use; they pulled out because both FR and EI, both airlines with cost bases considerably lower than AZ's, compete on both routes. AZ is a complete basket case and its latest business plan has failed.
Today's article in the Indo (Irish) was rather unhelpful - pure speculation about the possibility of 1,000 job cuts at Aer Lingus; it doesn't seem to be based on anything more that speculation that MO'L would follow WW's plan for the airline.
Reverting to the idea of FR continuing as a significant minority shareholder in Aer Lingus, surely this also works as a means to test FR's and MO'L's bona fides, in that the positives mentioned in MO'L's initial statements about the takeover of EI are surely achievable without full ownership; both airlines stand to gain. If, however, he feels that he needs majority ownership, might it indicate that what he has in store for EI is not necessarily in EI's interests as a long term business. In other words, minority ownership is the ideal way for MO'L to establish trust and bona fides; if it fails, then MO'L's fault entirely.
Today's article in the Indo (Irish) was rather unhelpful - pure speculation about the possibility of 1,000 job cuts at Aer Lingus; it doesn't seem to be based on anything more that speculation that MO'L would follow WW's plan for the airline.
Reverting to the idea of FR continuing as a significant minority shareholder in Aer Lingus, surely this also works as a means to test FR's and MO'L's bona fides, in that the positives mentioned in MO'L's initial statements about the takeover of EI are surely achievable without full ownership; both airlines stand to gain. If, however, he feels that he needs majority ownership, might it indicate that what he has in store for EI is not necessarily in EI's interests as a long term business. In other words, minority ownership is the ideal way for MO'L to establish trust and bona fides; if it fails, then MO'L's fault entirely.
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And do you think for one minute, that the corrupt and spineless twits in govt in this little green country will not announce some morning, "that someone has left them short .02% of shares, they cant remember who "and amazingly MOL has 75.1%. Yawn.
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oldlag53 your assertion that the "'Tiger Economy' is utter nonsense" based on living in Ireland for 2 years is about the most ignorant thing I have read on pprune for some time. Well done.
Had you lived in Ireland pre-boom days you would realise how completely stupid that remark is. The Republic's economy has gone from being technically rated part of the 2nd world (eg. Romania, India, etc) to first world in the last 15 years. I'm not going to bang on about the way things used to be, ask your Irish neighbours if you care to find out, but they were substantially worse in every way. Maybe you should find out a little about the history of the country you live in.
Had you lived in Ireland pre-boom days you would realise how completely stupid that remark is. The Republic's economy has gone from being technically rated part of the 2nd world (eg. Romania, India, etc) to first world in the last 15 years. I'm not going to bang on about the way things used to be, ask your Irish neighbours if you care to find out, but they were substantially worse in every way. Maybe you should find out a little about the history of the country you live in.
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O Leary will:
a) Get 51% of Lingus
b) Flog off long haul and the Heathrow slots
c) Run short haul as a seperate company to Ryanair
d) Make it lose money deliberately and in a few years time wind up the business
Thus achieving the elimination of its prime competitor in his home market, placing the IAA even deeper in his pocket, upgrading his strangle hold on Dublin Airport to a garrot hold, settling Tony Ryans old scores with Lingus AND generating himself acres of newsprint whilst spending the warchest instead of having to hand it back the unwashed ordinary shareholder via dividend.
Any sentimentality for good old Shamrock will be used as toilet paper. The very small airline as it stand with a foot in low cost a foot in long haul and foot in full service has no future now it is out of government hands.
Sad fact.
AP
a) Get 51% of Lingus
b) Flog off long haul and the Heathrow slots
c) Run short haul as a seperate company to Ryanair
d) Make it lose money deliberately and in a few years time wind up the business
Thus achieving the elimination of its prime competitor in his home market, placing the IAA even deeper in his pocket, upgrading his strangle hold on Dublin Airport to a garrot hold, settling Tony Ryans old scores with Lingus AND generating himself acres of newsprint whilst spending the warchest instead of having to hand it back the unwashed ordinary shareholder via dividend.
Any sentimentality for good old Shamrock will be used as toilet paper. The very small airline as it stand with a foot in low cost a foot in long haul and foot in full service has no future now it is out of government hands.
Sad fact.
AP
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The point where all this came from was lucrative slots at Dublin. It's a nice thought but I don't see it myself. In a weeks time, when MOLs intentions are clearer, we'll look back at this thread and see how far off the mark many of the speculations were. Lucrative slots at Dublin won't be an embarassing one but I doubt it'll be part of MOLs thinking.
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Hell will freeze over before MOL ever get his hands on EI. The government will not dispose of their 25% and staff will never dispose of their 16% - not to RYR anyway. Even they know that it would be suicide. While he may very well mop up 51% of shares on the open market, it wont be enough to force the remaining share’s to be handed over. At best he may have a mild influence on how the company is run but it will not be enough for out right control and we all know that Oleary cant/wont dance to other peoples tunes.
RYR have cracked the model on how to run a Low Class Shorthaul Airline but that model will not be tolerated for long haul. It cant work. You can treat me like ****e for an hour, maybe two but definitely not for 5 to 7 hours.
Everyone knows that the slot protection that the government built in to the EI sale simply will not stand up to any court if a majority share holder tries to asset strip EI. That’s the only reason they kept a 25% stake cause that is the only way they can protect it.
No chance Mick - no chance
RYR have cracked the model on how to run a Low Class Shorthaul Airline but that model will not be tolerated for long haul. It cant work. You can treat me like ****e for an hour, maybe two but definitely not for 5 to 7 hours.
Everyone knows that the slot protection that the government built in to the EI sale simply will not stand up to any court if a majority share holder tries to asset strip EI. That’s the only reason they kept a 25% stake cause that is the only way they can protect it.
No chance Mick - no chance
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New Ryanair rounte from BGY?
From March 2007 new 3rd daily BGY-GRO will be operated by a GRO based plane so there is free space for a new daily route with a BGY based plane!
Any idea/rumors of this new route?
Any idea/rumors of this new route?
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An Autumn Uprising.
What an odd world you live in, Pos-Init.
I don’t know where you learned about corporate governance, Pos-Init, but in the real world, I think you’ll find that a single share more than 50% is a controlling interest. In other words, Ryanair will run the company. The Irish governments position; or rather, the present Irish government’s position, in retaining 25% +1 share is to ensure that the company isn’t de-listed from the Irish exchange. Opinions will vary, no doubt, but some may see this as a rather cynical attempt to curry favour with certain crucial North Dublin electorates, popular among voters currently employed by Aer Lingus. Oh, and there’s an election next year…did I mention that?
Wrong again, I'm afraid. The two fundamental drivers of human behaviour, Pos-Init, are fear and greed. If you successfully manipulate these two levers, you can teach a jackass to play canasta. Speaking of which, how enlightening to observe to braying to emerge from the lunatic left wing leader of SIPTU in recent days, the same leader of the same staff who previously swore black and blue they’d never acquiesce to a privatised Aer Lingus…until, of course, the unedifying spectacle of Dermot Mannion industrially fellating Mick Halfpenny to the tune of millions and a seat on the Aer Lingus board. Kind of leaves a bad taste in your mouth, doesn’t it.
Quite so, but SIPTU and the curiously silent (or should that be silenced) IALPA would do well to recall Aristotle when he reminded us that one swallow does not a summer make.
While he may very well mop up 51% of shares on the open market, it wont be enough to force the remaining share’s to be handed over. At best he may have a mild influence on how the company is run
The government will not dispose of their 25% and staff will never dispose of their 16% - not to RYR anyway.
Anyone with a titter of wit could have foreseen this development.
.
