Aer Lingus - 5
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I stand by my original point, Aer Lingus has successfully operated in one of Ryanairs better performing bases for some time now. If AL was a pushover Ryanair would have forced them out of business rather than attempting to buy them.
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I would agree that Aer Lingus has done well to manage against Ryanair at Dublin and the Ryanair competition has made Aer Lingus a leaner machine.
However, it has to be said that Aer Lingus has managed to compete with Ryanair in the last number of years especially since Ryanair entered nearly all of Aer Lingus' Dublin EU markets, the irish economy was very affluent and people were not primarily motivated by price. And that has now changed.
Comments about Aer Lingus's cost base being way out of line as mentioned somewhere on the forum is not exactly true. Compared to it's competitive set (i.e. Ryanair, Easyjet) Aer Lingus may have work to do, but when compared to similar airlines, i.e. former national airlines flag carriers call them what you will they are in a good position as regards costs.
Aer Lingus gets so much attention about losses and challenges etc, but the fact is that so many if not nearly all airlines are suffering at the moment to a similar extent.
Aer Lingus has burned large amounts of cash in the last year and this is unsustainable.
However, it has to be said that Aer Lingus has managed to compete with Ryanair in the last number of years especially since Ryanair entered nearly all of Aer Lingus' Dublin EU markets, the irish economy was very affluent and people were not primarily motivated by price. And that has now changed.
Comments about Aer Lingus's cost base being way out of line as mentioned somewhere on the forum is not exactly true. Compared to it's competitive set (i.e. Ryanair, Easyjet) Aer Lingus may have work to do, but when compared to similar airlines, i.e. former national airlines flag carriers call them what you will they are in a good position as regards costs.
Aer Lingus gets so much attention about losses and challenges etc, but the fact is that so many if not nearly all airlines are suffering at the moment to a similar extent.
Aer Lingus has burned large amounts of cash in the last year and this is unsustainable.
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@no slot
No disagreement on your point about competition, but on your numbers you either can't read a set of accounts, or you're being extremely selective.
Aer Lingus is losing cash on an operating basis. In the 6 months to June 09 they had a cash burn of €90m. This was before aircraft purchases and there were no exceptional items in that number. Aer Lingus has cash of €768m (@Jun09) and debt of €595m relating to leases. All of this means the cash is running out fast, and AL will soon be into a net debt position rather than net cash.
Ryanair have cash at Jun09 of €2,500m, lease and debt obligations of €2,604m. That leaves a (small) net debt of €104m, which is an irrelevance when you have that much cash and positive operating cash (for the quarter to Jun09 it was €292m). If Ryanair transferred all owned aircraft to a leasing company they could dress up the balance sheet with extra cash too...
No disagreement on your point about competition, but on your numbers you either can't read a set of accounts, or you're being extremely selective.
Aer Lingus is losing cash on an operating basis. In the 6 months to June 09 they had a cash burn of €90m. This was before aircraft purchases and there were no exceptional items in that number. Aer Lingus has cash of €768m (@Jun09) and debt of €595m relating to leases. All of this means the cash is running out fast, and AL will soon be into a net debt position rather than net cash.
Ryanair have cash at Jun09 of €2,500m, lease and debt obligations of €2,604m. That leaves a (small) net debt of €104m, which is an irrelevance when you have that much cash and positive operating cash (for the quarter to Jun09 it was €292m). If Ryanair transferred all owned aircraft to a leasing company they could dress up the balance sheet with extra cash too...
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My point in an earlier post was to challenge the lazy alarmist view that AL is a basket case burning cash at an alarming rate, I am providing figures to support that. Capex of 184m, a percentage of that will return to the balance sheet once the leasing market recovers. Severance 93m ( more to come ), will reduce AL's high staff costbase making it cheaper to do business etc.
Yes AL is losing cash on an operating basis, as are most other Airlines at the moment, with the exception of Ryanair who are delevering strong operating profits in very challenging circumstances. AL's operating loss is a concern but not quite a worry, especially in light of the changes that have already and are continuing to take place. If AL's cash pile is exhausted survivng these tough times and transforming their cost base it may well be perfectly situated to prosper in the next period of growth.
As an aside, I have had a niggle of worry about Ryanairs growth strategy for the last couple of years. I think they may have expanded too much in a contracting market. i.e. too many new Aircraft bought in a declining yield market. That niggle has risen to the surface today when I read MOL say " we see no point in continung to grow in a declining yield market " . Is it a bit too late for that with all the 737's bought and financed? and a further concern comes from his quote considering paying shareholders a dividend.
I must emphasise this " niggle " is just that a " niggle ". Time and again Ryanair has championed its way through many tough scenarios, and will no doubt continue to do very well, however, I think a haircut is on the way before the good times return.
rgds
no slot
Yes AL is losing cash on an operating basis, as are most other Airlines at the moment, with the exception of Ryanair who are delevering strong operating profits in very challenging circumstances. AL's operating loss is a concern but not quite a worry, especially in light of the changes that have already and are continuing to take place. If AL's cash pile is exhausted survivng these tough times and transforming their cost base it may well be perfectly situated to prosper in the next period of growth.
As an aside, I have had a niggle of worry about Ryanairs growth strategy for the last couple of years. I think they may have expanded too much in a contracting market. i.e. too many new Aircraft bought in a declining yield market. That niggle has risen to the surface today when I read MOL say " we see no point in continung to grow in a declining yield market " . Is it a bit too late for that with all the 737's bought and financed? and a further concern comes from his quote considering paying shareholders a dividend.
I must emphasise this " niggle " is just that a " niggle ". Time and again Ryanair has championed its way through many tough scenarios, and will no doubt continue to do very well, however, I think a haircut is on the way before the good times return.
rgds
no slot
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No Slot
If AL's cash pile is exhausted survivng these tough times and transforming their cost base it may well be perfectly situated to prosper in the next period of growth.
I have had a niggle of worry about Ryanairs growth strategy for the last couple of years. I think they may have expanded too much in a contracting market. i.e. too many new Aircraft bought in a declining yield market. That niggle has risen to the surface today when I read MOL say " we see no point in continung to grow in a declining yield market " . Is it a bit too late for that with all the 737's bought and financed?
...and a further concern comes from his quote considering paying shareholders a dividend.
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Points well made and hard to ignore. As a previous poster said " Time will tell "
Absolutely agree, no cash no company. Replace " exhaust cash pile " with " invest percentage of cash in addressing staff costs ( circa 30% cost base ). "
Another way to kill a business is to expand ( through borrowing ) too quickly in a contracting market when your assets are non performing and depreciating. Look at Liam Carroll of ZOE developments, Taggart Holdings, and many previously championed Irish developers. Are all of Ryanairs Aircraft flying and included when the load factor of 85% is reported? ( I don't know the answer myself, it is a genuine question ) If so, savage load factor, if not mildly concerning, especially when MOL wants to reduce the unit price of his assets from the manufacturer he just bought a serious order from. How many 737's did Ryanair buy in their latest order? Net debt, contracting market, Non performing assets, Depreciating assets, Shareholder divdend reducing cash pile, cessastion of expansion, oil prices increasing or bad hedging....... Now I dont for one second know for a fact if this perfect storm is probable, but it is certainly possible. Like I said I have a niggle, not a worry, and certainly not a crystal ball. " Time will tell."
I am enjoying reading and contributing to this thread, but unfortunately I hate typing and have very little time to proceed much further in this debate. Thanks to all who had the time to contribute.
rgds
no slot
Absolutely agree, no cash no company. Replace " exhaust cash pile " with " invest percentage of cash in addressing staff costs ( circa 30% cost base ). "
Another way to kill a business is to expand ( through borrowing ) too quickly in a contracting market when your assets are non performing and depreciating. Look at Liam Carroll of ZOE developments, Taggart Holdings, and many previously championed Irish developers. Are all of Ryanairs Aircraft flying and included when the load factor of 85% is reported? ( I don't know the answer myself, it is a genuine question ) If so, savage load factor, if not mildly concerning, especially when MOL wants to reduce the unit price of his assets from the manufacturer he just bought a serious order from. How many 737's did Ryanair buy in their latest order? Net debt, contracting market, Non performing assets, Depreciating assets, Shareholder divdend reducing cash pile, cessastion of expansion, oil prices increasing or bad hedging....... Now I dont for one second know for a fact if this perfect storm is probable, but it is certainly possible. Like I said I have a niggle, not a worry, and certainly not a crystal ball. " Time will tell."
I am enjoying reading and contributing to this thread, but unfortunately I hate typing and have very little time to proceed much further in this debate. Thanks to all who had the time to contribute.
rgds
no slot
Points well made and hard to ignore. As a previous poster said " Time will tell "
Absolutely agree, no cash no company. Replace " exhaust cash pile " with " invest percentage of cash in addressing staff costs ( circa 30% cost base ). "
Absolutely agree, no cash no company. Replace " exhaust cash pile " with " invest percentage of cash in addressing staff costs ( circa 30% cost base ). "
Thats a new way of saying inept management overstaffed with highly paid employees and didn't tackle the issue and now throw cash to reduce its impact.
Its fine investing cash when its coming in but when rapidly decreasing and there is no return its called idiocy.
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Passenger numbers for October
Total: 902,000 (-0.2%)
Long Haul: 81,000 (-25.7%)
Short Haul: Not given, but presumably 821,000 (+3.3%)
Load Factor: 74.6% (+1.3%)
Long Haul LF: 70.1% (+1.3%)
Short Haul LF: 77% (-0.1%)
The report also says that capacity was down by 10%, but I can't make that square with the passenger and load factor figures.
Total: 902,000 (-0.2%)
Long Haul: 81,000 (-25.7%)
Short Haul: Not given, but presumably 821,000 (+3.3%)
Load Factor: 74.6% (+1.3%)
Long Haul LF: 70.1% (+1.3%)
Short Haul LF: 77% (-0.1%)
The report also says that capacity was down by 10%, but I can't make that square with the passenger and load factor figures.
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I'm lost on L/H firures
Less planes flew long haul but of the planes that did fly they were fuller than previous year.
RTÉ Business: Aer Lingus October traffic down slightly
The load factor on shorter routes was little changed at 77%, while the figure for long-haul routes rose 1.3 points to 70.1%.
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Q3 Interim statement
Interim Management Statement - London Stock Exchange
- Total revenues decreased by 9.7% during the quarter compared to the same period in 2008.
- Flown passenger numbers increased by 7% year-on-year to 3.08 million.
- Short-haul average fare fell by 12.3% year on year for the same period, partly offset by an increase of 8.5% in ancillary revenue per passenger
- Long haul average fare fell by 17.0% year on year.
- Net cash was €399.9 million as at 30 September 2009
- "While the fall in yield year on year continues, the pace of decline in average fares does not appear to be accelerating currently"
- No guidance given for full year result (as far as I can see).
Story in The Irish Times, suggesting that EI maybe considering "disposing" of 25% of their fleet.
http://www.irishtimes.com/newspaper/...258479348.html
JAS
http://www.irishtimes.com/newspaper/...258479348.html
JAS
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Merger?
Surely the answer to alot of EI's woes would be a merger with another airline allowing it to:
- introduce new T&Cs
- gain more economies of scale
- access more transfer traffic
- lessen reliance on Irish market
- increase market share and reach
In the interests of the Irish consumer a carrier other than FR would be more appropriate. But with FR owning 30% does that not snooker anybody else from trying to take over EI. I've nothing against FR but I think it wouldn't be good for Ireland to have only one dominant airline.
Any ideas on who could takeover/merge EI?
Or can they go it alone after all if you want to fly long haul you often end up on an EI codeshare flight to LHR or AMS so are they really loosing out to the big european players?
- introduce new T&Cs
- gain more economies of scale
- access more transfer traffic
- lessen reliance on Irish market
- increase market share and reach
In the interests of the Irish consumer a carrier other than FR would be more appropriate. But with FR owning 30% does that not snooker anybody else from trying to take over EI. I've nothing against FR but I think it wouldn't be good for Ireland to have only one dominant airline.
Any ideas on who could takeover/merge EI?
Or can they go it alone after all if you want to fly long haul you often end up on an EI codeshare flight to LHR or AMS so are they really loosing out to the big european players?