Aer Lingus - 5
There has been speculation about a larger carrier buying EI for years, most of it centring on BA.
But in reality, why would anyone bother buying EI (The FR reasons are obvious; simply to remove a competitor).
What would BA, LH, AF/KL gain by buying EI?
Market presence on a peripheral Eurozone island of 6million with high costs? If the routes are important I suspect it would be significantly less expensive to run routes out of their existing bases/hubs. Access to DUB, ORK, SNN, BFS et al aren't that difficult for anyone wanting to ply a route.
A fairly modern, maintained fleet? There isn't a shortage of airframes right now, so it's not likely to be that.
Staff? Again, staff costs in Ireland are fairly high in comparison to other Eurozoe countries, so it's not likely. And lest we forget, EI has some 'legacy' issues with their unions.
The brand. Perhaps, but how much is the brand loyalty worth? In a competitive environment how may pax with options only ever travel on one carrier?
Slots. Maybe, but in a depressed market, is there still massive competition for these and are they worth the cost of taking over an entire operator?
Cash pile ... as has been mentioned earlier, this is reducing.
So, what is the value of buying EI to an external carrier? I honestly can't see any.
You could argue that if the share price was low enough that it valued the airline at such a low level that it seemed like a "bargain" it would be gobbled up, but even at the price EI floated, its share capital was equal to it's declared cash pile plus less than the scrap value of it's fleet. Hardly overpriced, yet no industry takers.
It's not impossible that there is a "friendly competitor" out there who is willing and able to take EI into it's fold, but I suspect that on a purely business basis there is very little reason to do it.
JAS
But in reality, why would anyone bother buying EI (The FR reasons are obvious; simply to remove a competitor).
What would BA, LH, AF/KL gain by buying EI?
Market presence on a peripheral Eurozone island of 6million with high costs? If the routes are important I suspect it would be significantly less expensive to run routes out of their existing bases/hubs. Access to DUB, ORK, SNN, BFS et al aren't that difficult for anyone wanting to ply a route.
A fairly modern, maintained fleet? There isn't a shortage of airframes right now, so it's not likely to be that.
Staff? Again, staff costs in Ireland are fairly high in comparison to other Eurozoe countries, so it's not likely. And lest we forget, EI has some 'legacy' issues with their unions.
The brand. Perhaps, but how much is the brand loyalty worth? In a competitive environment how may pax with options only ever travel on one carrier?
Slots. Maybe, but in a depressed market, is there still massive competition for these and are they worth the cost of taking over an entire operator?
Cash pile ... as has been mentioned earlier, this is reducing.
So, what is the value of buying EI to an external carrier? I honestly can't see any.
You could argue that if the share price was low enough that it valued the airline at such a low level that it seemed like a "bargain" it would be gobbled up, but even at the price EI floated, its share capital was equal to it's declared cash pile plus less than the scrap value of it's fleet. Hardly overpriced, yet no industry takers.
It's not impossible that there is a "friendly competitor" out there who is willing and able to take EI into it's fold, but I suspect that on a purely business basis there is very little reason to do it.
JAS
Join Date: May 2007
Location: Belfast, UK
Age: 43
Posts: 896
Likes: 0
Received 0 Likes
on
0 Posts
I see great potential in a EI/BA merger
However I could see, if this was ever to happen, that BA would only keep the very popular/profitable long-haul routes from DUB, to compete with the other transatlantic carriers, but otherwise try and feed into the BA LHR flights, like has happened in the UK regions.
Join Date: Mar 2005
Location: on the road...
Posts: 176
Likes: 0
Received 0 Likes
on
0 Posts
No redundancy payments would be due, but it's covered by the Transfer of Undertakings regulations. This provides employees with the right to transfer from a business or part of a business to a new undertaking on their current terms of employment and with service intact (important for pensions obviously)
Good link here if you want to read more.
Good link here if you want to read more.
Join Date: May 2006
Location: N59W30
Posts: 67
Likes: 0
Received 0 Likes
on
0 Posts
Staff? Again, staff costs in Ireland are fairly high in comparison to other Eurozoe countries, so it's not likely. And lest we forget, EI has some 'legacy' issues with their unions
Interesting times.
Join Date: Nov 2007
Location: Between a rock & a hard place.
Posts: 487
Likes: 0
Received 15 Likes
on
7 Posts
Why would anyone, despite EI being a great airline to fly with, want to buy them?
LHR slots to start with.
Why will no-one, despite EI being a great airline to fly with, buy them?
Ryanair's share holding.
LHR slots to start with.
Why will no-one, despite EI being a great airline to fly with, buy them?
Ryanair's share holding.
Join Date: Jun 2008
Location: IRELAND
Posts: 60
Likes: 0
Received 0 Likes
on
0 Posts
Exactly. They need to look at a smaller short haul ac. It could even have the effect of opening up new potential routes as well as making existing routes more profitable.
They emulated Ryanairs policy too much, they really should have looked at Jetblue, which as you know uses both a320 and e190.
I think the C series would be a very good bet. In particular, one of the c110 veriants has excellant projected shortfield performance.
They emulated Ryanairs policy too much, they really should have looked at Jetblue, which as you know uses both a320 and e190.
I think the C series would be a very good bet. In particular, one of the c110 veriants has excellant projected shortfield performance.
Join Date: Jul 2006
Location: Europa
Posts: 1,443
Likes: 0
Received 0 Likes
on
0 Posts
they really should have looked at Jetblue, which as you know uses both a320 and e190
Thread Starter
Join Date: Aug 1999
Location: Dublin, Ireland
Posts: 1,879
Likes: 0
Received 0 Likes
on
0 Posts
I think it's a case of horses for courses; commonality is of no use or consolation if your main competitor can run rings around you when you're using the wrong airplane; don't get me wrong - there are a lot of positive aspects to the Airbus series and to the commonality not just between the A320 series, but the CCQ with the A330 as well. BUT ...
If EI is operating aircraft at very low loads on routes which could be sustained if they had a smaller aircrat and particularly, if FR is driving them out of particular markets, then it is surely time to think. A smaller jet which would (a) allow EI to maintain some marginal routes, (b) improve the prospects for having an effective hub at DUB and (c), most importantly, be more effective in challenging FR head-on makes a lot of sense.
Sean Coyle, given his FR experience, is in a very good position to understand the FR model and based on that, to draw up specification for an aircraft which could allow EI to tackle FR effectively on certain routes. Staying with the same model - either of business or of aircraft - when it's clear that it's not working, is stupid. All it's going to ensure is that EI will burn through its cash pile, for very little real gain - and that it is more likely to end up in FR's tender embrace.
If EI is operating aircraft at very low loads on routes which could be sustained if they had a smaller aircrat and particularly, if FR is driving them out of particular markets, then it is surely time to think. A smaller jet which would (a) allow EI to maintain some marginal routes, (b) improve the prospects for having an effective hub at DUB and (c), most importantly, be more effective in challenging FR head-on makes a lot of sense.
Sean Coyle, given his FR experience, is in a very good position to understand the FR model and based on that, to draw up specification for an aircraft which could allow EI to tackle FR effectively on certain routes. Staying with the same model - either of business or of aircraft - when it's clear that it's not working, is stupid. All it's going to ensure is that EI will burn through its cash pile, for very little real gain - and that it is more likely to end up in FR's tender embrace.
Join Date: Feb 2004
Location: Crawley
Posts: 178
Likes: 0
Received 0 Likes
on
0 Posts
EasyJet's LGW plans for the winter include frequency increases on VIE, MUC and ZRH. It is very hard to see how EI can possibly make any profits io these routes in these circumstances. It seems they have made the fatal mistake of underestimating their competition's response to their entry into LGW.
When can we expect an announcement from EI about how well their LGW base is doing in profit terms?
When can we expect an announcement from EI about how well their LGW base is doing in profit terms?
Join Date: Jun 2008
Location: IRELAND
Posts: 60
Likes: 0
Received 0 Likes
on
0 Posts
"Aer Lingus was profitable from 2002 - 2007 with the A320 aircraft. A small carrier like EI needs to keep costs as low as possible and diversifying its fleet of aircraft is not an option. It would impact to much on costs. You cannot compare EI with a fleet of 40 aircraft with Jetblue an airline with over 150 aircraft. Finnair are a small airline just like Aer Lingus and they have a mixed fleet. Now just look at the mess they are in at the moment cutting 6000 jobs. It is now inevitable EI will be taken over by FR, I just cannot see anyone else come in and take them over especially with FR having a 30% stake in the company. And in my opinion any other airline would be mad to take over EI especially with FR up your backside."
They made a profit 2002-2007 when many airlines were making profits and there was a boom in global aviation travel. Thats hardly an achievement. Seriously, they could have put the A330 on some short haul routes and filled it. The point is, the A320, whilst very good works best when times are good. A smaller aircraft will have lower running costs and work better with lower load factors.
As for Finnair, sure they are cutting alot of jobs.....but what have Aer Lingus done over the past few years???????
They made a profit 2002-2007 when many airlines were making profits and there was a boom in global aviation travel. Thats hardly an achievement. Seriously, they could have put the A330 on some short haul routes and filled it. The point is, the A320, whilst very good works best when times are good. A smaller aircraft will have lower running costs and work better with lower load factors.
As for Finnair, sure they are cutting alot of jobs.....but what have Aer Lingus done over the past few years???????
Join Date: May 2006
Location: N59W30
Posts: 67
Likes: 0
Received 0 Likes
on
0 Posts
Sean Coyle, given his FR experience, is in a very good position to understand the FR model and based on that, to draw up specification for an aircraft which could allow EI to tackle FR effectively on certain routes
Join Date: Apr 2009
Location: Suck on me toe
Posts: 85
Likes: 0
Received 0 Likes
on
0 Posts
Route Considerations
Gatwick seems to be badly served to Warsaw, Paris(&North of France) Norway, Jersey and Sweden by Easyjet and Ryanair. Might it be wise to consider some of those routes?
Gatwick seems to be badly served to Warsaw, Paris(&North of France) Norway, Jersey and Sweden by Easyjet and Ryanair. Might it be wise to consider some of those routes?
Norwegian have moved their operation from Stansted to Gatwick.
Flybe have a substantial operation from Gatwick and Southampton to Jersey and Guernsey
LGW to Sweden might be interesting - although Aer Lingus no longer operate from Ireland to Sweden so this would involve setting up a new station.
Last edited by davidjohnson6; 9th May 2009 at 09:46.