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Aer Lingus - 5

Old 18th Aug 2009, 18:36
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Aer Lingus can do what it wants with the slots (lease them, move them etc) other than dispose of them, without approval from the State.

The State does not have a veto re. the use of the slots, but can exercise influence as a shareholder in this regard. 700M euros is alot of money for the governments empty coffers!
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Old 18th Aug 2009, 18:39
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Let MOL have it. He already owns about 30% anyway.

I am sure he would treat everybody with the greatest respect and help to safeguard jobs.

You could call it Aer Ryan.
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Old 18th Aug 2009, 18:46
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I thought of a better one.

Cull-in-lingus!
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Old 18th Aug 2009, 18:57
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The ( still seen as ) Irish national carrier in the clutches of the ( still seen as ) British flag carrier. Not particularly neutral at all that one (!)
Yea sure
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Old 18th Aug 2009, 19:14
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You could call it Aer Ryan

Or just plain ole RyanAer
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Old 18th Aug 2009, 19:22
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If thats the case they really will go bust!!!!
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Old 18th Aug 2009, 19:25
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I thought of a better one.

Cull-in-lingus!


Very punny indeed and a probable outcome in the present circumstances. Ironic that a willy might be getting involved in the process though....


SHJ
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Old 18th Aug 2009, 19:40
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Aer Lingus

Aer Lingus is too small to survive on its own.
It has no potential to expand its Irish customer base under the current economic climate.
A merger with a European legacy carrier is its only realistic option.
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Old 18th Aug 2009, 20:09
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Is the thread starter Mr Muller's mini-me?

I cannot see anyone buying into Aer Lingus whilst Ryanair hold a 30% stake. Walsh and O'Leary as amicable partners?
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Old 18th Aug 2009, 20:57
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I love this expression "ring fenced". It keeps cropping up in management-speak bull**** propaganda , but I haven't a clue what it means (along with most other people I suspect) - if indeed it means anything at all. How, or indeed why, would/could anyone put a fence around a slot? Wouldn't a fence obstruct the runway/apron, or whatever other part of the airfield that a slot inhabits?
When people use this type of expression it means they are talking through their 'ring' themselves.

As the senior native English speaker in my old department (sorry, business unit ....) I used to attend meetings ( ... debriefings) and pretend not to know what they were on about when they started with this bull****.
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Old 18th Aug 2009, 21:06
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Ring Fence = protect

Bregards
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Old 18th Aug 2009, 21:11
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About the Heathrow slots: they were worth a lot of money 2 or 3 years ago (apparently). Surely their economic value has fallen drastically with recent falls in demand for air travel = fall in demand for slots. Given that the supply is fixed that means the adjustment is all on the price side (economics 101 really!)
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Old 18th Aug 2009, 21:11
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Aer Lingus is too small to survive on its own.
Therefore every carrier the same size or smaller is doomed? Utter tosh. Aer Lingus will survive if it can get costs under control and prevent revenue falling too far. They have survived against a certain Ryanair in Dublin for a while now.

What is this arbritary size that you need to attain to survive please? Do enlighten us. Now I was going to book Loganair for a hol in September but by this absurd logic they are screwed as well so I won't bother now.

with recent falls in demand for air travel = fall in demand for slots
Not true across the board as every time this happens, Heathrow remains annoyingly full as new operators pay silly money to move in.
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Old 18th Aug 2009, 22:48
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Aer Lingus too small to survive

The former flag carrier has operated successfully in a niche market, serving a small island nation which has suffered in the recent economic downturn.

Its shorthaul routes are under intense loco carrier competition, whilst its long haul (transatlantic) business has shrunk by 20%.

Its cost base is relatively high and its cash reserves are rapidly diminishing, much to the concern of the beancounters.

This scenario does not bode well for a stand alone carrier and could leave them exposed to a BA or similar merger (takeover).

Don't worry about differences of opinion between BA & Ryanair bosses.

They have a lot more in common than you think!
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Old 18th Aug 2009, 23:03
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As the slots at LHR are 'owned' by Aer Lingus, how are they ringfenced? If a takeover is on the cards then they will be a part of the deal surely?
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Old 19th Aug 2009, 07:24
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Which EU airline has cash?

What EU airline would want MOL on their share register?
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Old 19th Aug 2009, 07:42
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All right - I'll bite.

Ryanair has cash (and 30% of Aer lingus)

MOL is CEO of one of the most profitable EU airlines. I'll bet BA shareholders wish their company was as profitable...?

WP
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Old 19th Aug 2009, 07:47
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MO'L has already been rejected in efforts to merge Aer Lingus (see takeover) with Ryan. Can't see him sitting quielty on a board with say Wee Willy, or any other potential buyer, having been turned down himself. That fact together with any current problems in Aer Lingus doesn't make it a very attractive "merger" prospect I wouldn't think.
I would hate to see the demise of the flying shamrock though so hopefully something can happen.
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Old 19th Aug 2009, 08:32
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I'm sure Aer Lingus would love to merge with someone. It's the airline's only hope of survival. It's burning cash at an alarming rate and will run out before the end of 2009.

However, it is not a "normal" struggling company. Its share register is not dominated by professional money managers (pension funds, investment managers etc). Instead two shareholders between them own 55% of the company. Ryanair has 30%, and the Irish governement 25%. Add to that the third largest shareholder is, I think, IALPA which bought more shares for the pilots' pension fund when Ryanair made its first takeover bid. We can be fairly sure that Ryanair won't be handing over its 30% stake to anyone that it feels represents competition.

That brings us on to who might buy Aer Lingus. I'm not aware of any legacy airline awash with cash right now. BA, for instance, may or may not be a great fit as per Muellerlight. It certainly couldn't buy Aer Lingus for cash. Therefore any legacy airline merger will almost certainly be a 100% or mostly share deal. In other words, any purchaser would have Ryanair as a significant shareholder. Aer Lingus' other big shareholder, the Irish State, wants cash though. It is desperate for cash. Ireland's credit rating has already been cut twice this year because of its fiscal position. Tax revenues are down 30%. Expenditure is up. Also, having the Irish State as a major shareholder would have all kinds of issues with EU competition law for the acquiring airline. Overall, I can't see the attraction of a share offer for Aer Lingus for either main shareholder.

Who could pay cash for Aer Lingus? Well Ryanair still could if it wanted to. Alternatively, a private equity firm or consortium could do so. They are, apparently, awash with cash and looking for deals. Their aim would be to change working practices ruthlessly, up operating margins, then sell the airline once the economy/industry had recovered. Or they might just break up the company. Economically, Aer Lingus would have been better off sold to Ryanair when the first bid was received. Unfortunately Irish politics got in the way. I suspect the government here now regrets that enormously. O'Learly offered them €1 billion for their 25% stake. They'll be lucky to get €250 million now.
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Old 19th Aug 2009, 10:36
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Good analysis JP, I was going to respond to willit that just because MOL has been turned down once, that does not preclude another attempt. Your post illustrates that MOL may well be tempted with a bargain now.

WP
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