Aer Lingus - 5

[racedo]

You'll have to explain this one slowly. FR have lost 130million protecting their share portfolio but this is OK as they may be able to declare any rise as profit at some future date. Sounds a little thin to me.

Ok my friend

FR will originally have the value of the investment in EI shares in FR Balance sheet at overall price they bought at on stock exchange.

Valuation always known because you find out share price and they have to state number of shares held. Now they record it at its Current value based on share price on a particular day.

If share prices rises then you can state increase in value in Reserves (profits etc from previous years) NOT in Yearly Profit. This is a way to stop companies to fiddling a Years profit by messing with another companies share price to go get them to go up just as its year end is reported. Guinness takeover of Distillers in 80's was along this line but with different circumstances.

If share price collapses as with EI and likely never to recover (thats a judgement call) you have to include the drop in value in calculating the Yearly Profit as Loss in Value of the investment in year it occurs, FR having put 93 Million already as a loss and as suggested probably 130 Million in Q4. If rises again you put positive back into reserves never in yearly profit. Just a way to prevent companies fiddling profit....think it dates back to Robert Maxwell in the 1970's.

Reality is this happens all the time as many companies own shares in others.

Cash or no cash they are 130million less well off facing declining consumer demand and all these new aircraft to pay for. I appreciate your defending Mr O'Leary but are you sure he hasn't just screwed the pouch royally?

Its only important if a company were going to sell the shares and as they are already paid for then the drop in value has no impact on cash a company has.

Kind of like your house going up in value or down in value it has little impact if you paid in cash for it and not thinking of selling it......you no richer or poorer depending on what the value is month by month, you may feel richer or poorer but until sell it has no impact.

Could impact if company needed to sell shares to get cash but loss in value already reported so you know roughly what they would get..

Apologies if make it sound too easy but just trying to answer and have revised it given Aloue comments..

[Aloue]

A company will have the value of the investment in another companies shares shown in Balance sheet ...

racedo you certainly don't make it sound easy to me! The shares referred to are not in another company, but in the same company, so the remark quoted above is both irrelevant and misleading. (In fact the issues relating to this are not rocket science and a clear explanation could have been provided, if you really knew).

I just love the suggestion that a paper loss is not real in the case above, but - when you commented on a paper loss involving Aer Lingus pilots - you seem to have a completely different view. This is surprising since the Aer Lingus investment by pilots was a strategic investment. So it appears that your opinions in both cases are 180 degrees wrong!

Your posts suggest that you are very confident of opinions that are poorly supported. I just loved your willingness to also answer questions about pilot ownership of shares in Aer Lingus - though here again a careful reading suggests your confident assertions are supported mainly by a seriously excessive tendency to hot air, combined with little real understanding.

I now remember why I gave up reading PPRuNe some years ago! I think I might revert. Aviation seems to be inhabited by experts who know tiddly squat other than how to spout confident twaddle.

[racedo]

racedo you certainly don't make it sound easy to me! The shares referred to are not in another company, but in the same company, so the remark quoted above is both irrelevant and misleading. (In fact the issues relating to this are not rocket science and a clear explanation could have been provided, if you really knew).

I just love the suggestion that a paper loss is not real in the case above, but - when you commented on a paper loss involving Aer Lingus pilots - you seem to have a completely different view. This is surprising since the Aer Lingus investment by pilots was a strategic investment. So it appears that your opinions in both cases are 180 degrees wrong!

I have revised the previous BUT have been clear its NOT a paper loss its real because you have to state the Loss in Value of Investment against their Profits....thats why suggesting 130 M in Q4 and they have already taken 93M in last 3 Quarters. This is exactly same as EI pilots surprisingly enough as the value of their investment has gone down.

It doesn't have any impact on cash with FR because in FRs case the shares are already paid for with no loan, has an impact on the EI Pilots because they had a loan of 10m against the shares plus their 15M input, shares worth prob 5.5 M so new loan will be for way less than 10M so need to make up the diff between New loan and paying BoS back, I'm suggesting 15k ish but happy to be corrected with real figure.

[Aloue]

racedo the fact that you are willing to pontificate on the basis of scant knowledge is now very clear. This is not to mention your willingness to apply your superficial knowledge without any real concern for the actual facts. What you say above is highly dependent on your personal (and very questionable) assessments of what is actually going on in both cases.

Consider this statement: racedo fails to fully appreciate the amortisation policies at work here, the role played by tax offsets and the use of cash flow to maximise capitalisation benefits; in combination with clever gearing arrangements on the loan account, and preferential share purchase leverage mechanisms, the medium term financial advantages and benefits are thus evident.

I concede that this is guff. But to the uninitiated it might give the appearance of wisdom. But it is still guff.

racedo, let's just forget the foregoing and put it behind us. Since you are so willing to speculate I'd really like you to tackle an intriguing and very real issue. So here is the serious question: what do you make of the challenge to Ryanair of reduced traffic, cash flow and yield in the context of Ryanair's committment to purchase so many aircraft (whose arrival cannot be deferred)? It would be helpful if your assessment took into account the consequences to Ryanair's cash reserves due to (a) previous aircraft deliveries, (b) fuel-hedging errors, (c) the failed efforts to take-over Aer Lingus and other recent demands on their cash reserves (such as losses). Bonus question: what are the current, unencumbered, cash reserves available to Ryanair and is their business model at any risk?

Anyone who has something to say will be welcome to give their opinion - but please note that ideology and bluff will attract a penalty of 25% on the overall grade.

[Gold Rivet]

Odie (errr sorry, Racedo) did you ever work for VARIG?
I'm getting certain vibes....
You ain't no Paddy, no how. Not even a native english speaker evidently.

We all know what happened to VARIG.....
Keep up the good work at Ryanair!

[Shamrock350]

Aer Lingus restores the link between Shannon and Heathrow this evening when EI387 touches down at 2030 and then returns to London at 2110 as EI388. The twice daily service will initially be operated by an Airbus A320 before changing to an A321 from May onwards.

[racedo]

what do you make of the challenge to Ryanair of reduced traffic, cash flow and yield in the context of Ryanair's committment to purchase so many aircraft (whose arrival cannot be deferred)?

It would be helpful if your assessment took into account the consequences to Ryanair's cash reserves due to (a) previous aircraft deliveries, (b) fuel-hedging errors, (c) the failed efforts to take-over Aer Lingus and other recent demands on their cash reserves (such as losses). Bonus question: what are the current, unencumbered, cash reserves available to Ryanair and is their business model at any risk?

Fair question

This should be in the FR section...

What reduced traffic ? Aena is already stating that they are increasing number of routes by 16% but not offering full capacity i.e. daily flights by x times on those routes.
Early summer capacity down by 4.8% in Europe; Norwegian in pole position for growth | anna.aero


Previous and current aircraft deliveries have been funded by US EXIM bank and Sale and Leaseback with RBS and some straight cash so you buy real cheaply plus they have a lot of leases. But biggest benefit is that if you optioned a plane in 2002 for $25M it would have cost you 27M Euros if paid for then, now it would cost FR less than 19M Euros and some still getting delivered from the old contracts. Even paying full price means you way better off........not so with anybody in Eurozone buying from Airbus.

They have also sold on quite a number of the delivery slots options to other airlines since 2007 ...23 at last declaration so guess thats a nice benefit and profit. As for selling on aircraft they sold 8 in last quarter for 169M Euros and took deposits for others which they are offloading in 2009. They used proceeeds of this to buy back shares and pay off some debt. Its all public available info which is my source.

Cash flow is helped by not paying excessively for fuel and avoid the mistakes of hedging too late as last year but that has already been declared and absorbed.....pretty much every airline in same boat but FR screwed up bigtime and have stated the cost impact. Some have hedged very expensively going forward assumming the $200 a barrel was going to happen, but FR are hedged around $700 a tonne.

Effort to take over EI was I believe more to do with not taking a downvaluation against profit in Q3 results as EI share price was 1 Euro before bid and FR has it stated at 1.40. Cost of bidding for EI in 2008 was couple of million if that for advisers. Write down of this investment has no impact on cash flow but a big hole in profits but they have used this to screw the pilots for pay cuts.

On Cash reserves they have 2 Bn in the bank and current liabilities of 1.2 Bn, so free cash of 800m. They have other debt of 1.9 Bn but thats payable of anything up to 10 years with assets of 3.6 Bn so unless they ceased trading and couldn't sell the aircraft cash flows from existing business will account for that.

My presumption is you wish to debate rather than cheap point score.

[PPRuNe Pop]

Heads up!

There are signs on this thread of trying to out someone and it will not be tolerated. The person concerned well knows who he is.

Any further attempts to do so will result in a ban.

A&R Mods.

[Gold Rivet]

Spin, Spin, and yet MORE Spin....

....so you buy real cheaply plus they have a lot of leases.

The 'leases' you consistently refer to are another Ryanair spoof and a tax avoidance scam. They have set up at least one Cypriot company (a tax haven) to which ownership of a number of aircraft was transferred. These aircraft are the 'leased' back by Ryanair. Its like playing pass the parcel with yourself. They own the aircraft and cannot simply offload them as you infer.

But biggest benefit is that if you optioned a plane in 2002 for $25M it would have cost you 27M Euros if paid for then, now it would cost FR less than 19M Euros and some still getting delivered from the old contracts. Even paying full price means you way better off........not so with anybody in Eurozone buying from Airbus.

Your argument is akin to a man buying a house at 50K less than last year and crowing about the big saving. Meanwhile, he can't rent it, can't sel it, its value is falling, and he still has a mortgage to pay.
Only an idiot would consider this a good outcome.

They have also sold on quite a number of the delivery slots options to other airlines since 2007 ...23 at last declaration so guess thats a nice benefit and profit.

PROFIT??
What nonsense is this?
In order to declare a profit they'd have to declare what they paid for the orders, and what they sold them for. Ryanair jealously guards such information....yet you up and declare a 'profit'...just like that! SPIN!!

Incidentlly, in 2007 they were indeed still in the aircraft trading business. That all ended in 2008 when they off loaded (as I recall) 4 aircraft for less than a hundred grand. Them days are gone. Nobody needs Ryanairs half kitted bangers with fixed back seats, no window blinds, no galleys, bizarre colour schemes and 'one of everything' cockpit fit out.

As for selling on aircraft they sold 8 in last quarter for 169M Euros and took deposits for others which they are offloading in 2009. They used proceeeds of this to buy back shares and pay off some debt. Its all public available info which is my source.

I've asked you before to show us these 'public sources' but you've failed to do so. Try again.

Cash flow is helped by not paying excessively for fuel and avoid the mistakes of hedging too late as last year but that has already been declared and absorbed.....pretty much every airline in same boat but FR screwed up bigtime and have stated the cost impact. Some have hedged very expensively going forward assumming the $200 a barrel was going to happen, but FR are hedged around $700 a tonne.

Waffle.

Effort to take over EI was I believe more to do with not taking a downvaluation against profit in Q3 results as EI share price was 1 Euro before bid and FR has it stated at 1.40. Cost of bidding for EI in 2008 was couple of million if that for advisers. Write down of this investment has no impact on cash flow but a big hole in profits but they have used this to screw the pilots for pay cuts.

Whats he gonna bid next year to avoid "taking a downvaluation against profit". Just putting off the evil day.

On Cash reserves they have 2 Bn in the bank and current liabilities of 1.2 Bn, so free cash of 800m. They have other debt of 1.9 Bn but thats payable of anything up to 10 years with assets of 3.6 Bn so unless they ceased trading and couldn't sell the aircraft cash flows from existing business will account for that.

800M - is that before or after paying for the 100+ aircraft due to be delivered this year and next?

My presumption is you wish to debate rather than cheap point score.

When it comes to you baby, I love cheap point scoring.

[Aloue]

Gold Rivet thank you, thank you and thank you again. I read what racedo had to say with a sense of utter tedium as I contemplated whether or not to reply. You did the job. And well done.

But this guy is clearly is not to be seasily topped. This is a man or, (most unlikely) a woman, who is not for allowing him or herself to be thwarted by any "inconvenient truth".

Among the gems to behold are:

plus they have a lot of leases

Yea, like don't you get what is going on here....? (Of course you don't).

Even paying full price means you way better off........

Its all public available info which is my source.

Cash flow is helped by not paying excessively for fuel

... I mean, does this guy do irony, or does really do IRONY.

Effort to take over EI was I believe more to do with not taking a downvaluation against profit in Q3 results ..

Guff to the power of 10. Well now we know why he does not understand what the Aer Lingus pilots are up to, and why!!

so free cash of 800m

An answer... hmmmm

[Gold Rivet]

You're welcome Aloue.
More detail about Ryanairs tax scams here: Ryanair pays less tax than boss O'Leary - Irish, Business - Independent.ie

[cougafer]

Does anyone know when Aer Lingus' £9.99 sale (on BFS routes) is due to end?

[racedo]

An answer... hmmmm

Guess that answers my question about whether you interested in any discussion.......answer is a clear NO.

Other individual is fixated on me being someone else so no interest in even reading them.

[Hawk]

OK ladies and gentlemen. We have had enough. Cease the focus on personalities and re-focus on the issues. If you need to take pot-shots at each other do it elsewhere. This is the second and final warning.

Thank you.
AA&R Mods.

[840]

Total change of topic here (Thank God)

Is SkyShopping only offered on board out of Cork, Dublin and Shannon?

I ask, because I notice that they have no sterling prices in the menu section and they do on the menu in Cara. Or do they have some other kind of on board shopping available out of Belfast and Gatwick.

I also wonder do they make any money out of it on routes where there's no duty-free?

[johnref]

they do it on Belfast too - havent bought - but flying Thursday and can let you know - have a feeling it is at prevailing exchange rates.

[brian_dromey]

I assume they would make money on it on the same basis as any other retailer would. Granted, its probably not very much by the time crew commissions and other costs are extracted.

Brian.

[BFS101]

Travelled Aer Lingus BFS-ACE-BFS start of March and had both the inflight magazine and sky-shopping catalogue in seat-back pocket.

Crew informed the passengers that some items on sale during the flight, while other were mail order only, such as the EI branded merchandise

[EI-BUD]

Knock-Gatwick

Aer Lingus start Knock London Gatwick tomorrow, and for the first flight from Knock the price to fly tomorrow is still available 1 day in advance at 0.00 plus taxes one way total 24.99! It would seem that no fares have been collected on the first flight just taxes so far!

The locals are in for low prices in coming months!

Ei-BUD

[Shamrock350]

The first flight from the new base at London Gatwick is EI902 to Malaga at 0610 and current fares are £158.98 one way including taxes and charges. The second flight to Malaga tomorrow is EI906 at 1730 and current fares are slightly higher at £188.98 including taxes and charges.

The first flight to Knock from Gatwick, EI916 at 1305 is currently £63.98 one way including taxes and charges.

Overall fares at Gatwick have gone up recently, the £9.99 fares are no longer available for flights to Europe.