Aer Lingus - 6

[EI-A330-300]

Article in one of yesterdays papers saying that EI may be about to put 150 million into the pension deficit fund.

[EISNN]

that's not going to be enough though, is it? i heard its something like €750 million in deficit.

[Jack1985]

The DAA and other employers owe money to that as well not just Aer Lingus.

[Hangar6]

Pension fund

I believe it is not a legal fact that EI
OWEs anything at all to this pension fund however all sides to the discussion are seeking an agreed settlement , it's complicated but an agreed way forward is slowly being formulated and the matter if it can be agreed will remove a hurdle or shadow that hangs over EI which will result in a brighter future for all concerned ,including shareholders, given this issue is not helping any potential
Investors , still the share price is going in the right direction ...

[EI-A330-300]

EISNN don't take this the wrong way but unions and staff in Aer Lingus need to get real and understand that some of the pensions will be lost and that's just fact and all you need to do is look at other companies who's employees lost some of their pensions. A prefect example is Waterford Crystal workers, when the court case finished the Government will not be paying 100% of the pensions that have being lost but only a certain amount and the same will happen in EI weather staff or unions like it or not.

[840]

You'd hope that EI will do nothing unilaterally.

How the deficit would divided up, should EI and the DAA (which other companies are involved?) is unclear.

Based on shareholders' funds, the DAA is a slightly larger company than Aer Lingus (952m v 835m), so it would be expected that their share would be slightly larger. Still, you aren't even looking close to 750m.

What is possible is that with the recent upturn in global stockmarkets, the level of the deficit may have declined. EI and the DAA may want to use this to create a once-off permanent solution.

[racedo]

EI and the DAA may want to use this to create a once-off permanent solution.

Until next time...............


They gave €100 million on floatation and then gets asked for more.

The comment re shareholders is curious as what benefit is it to shareholders for the company to give €150 M on a liability that is unproven in court.

[Hangar6]

Oh dear ducksie is awake

Well IMHO shareholders want any perceived or potential liabilities resolved
With the minimum of fuss disruption etc , removing this pension issue means MR H for example and even others may seek to increase their holding in EI , typically when buyers move in to buy shares market forces kick in and the share price increases.....

I may even get in on the act myself,

Of course the poison dwarf still has shares but sure even he will be happy pension issue resolved as his written down share holding value will increase
And his board will be even happier

R am I deluded here ?

Anyway Ducksie nice numbers today cut the little people some slack

[dublinaviator]

Originally Posted by racedo

The comment re shareholders is curious as what benefit is it to shareholders for the company to give €150 M on a liability that is unproven in court.

Aer Lingus can't secure investment as long as this pension issue is hanging over it. Who would invest in an airline that may or may not be liable to pay hundreds of millions into a €750mln pension deficit? Once that uncertainty is removed, they will have no problem securing investment in the airline which will benefit all shareholders.

[racedo]

Aer Lingus can't secure investment as long as this pension issue is hanging over it. Who would invest in an airline that may or may not be liable to pay hundreds of millions into a €750mln pension deficit? Once that uncertainty is removed, they will have no problem securing investment in the airline which will benefit all shareholders.

What investment exactly are you talking of ?

What return are Aer Lingus guaranteeing to the investors ?

How are shareholders expected to benefit if the company still has to make the payments to investors even though the returns do not turn out as planned, i.e. New bases etc....

[EISNN]

@EI -A330-300

No offence taken. I guess I didn't make myself clear. The scheme is on a downward trend any way that you look at it. €105m was injected into it in 2006. That left it at approx a flat €0 balance. €150m still leaves a €600m deficit. I'm not expecting EI management to fill the deficit nor am I expecting the DAA to fill it. The pension fund is in the cra**er either way. There are not enough staff paying into the fund like there would have been years ago. approx 15 years ago EI had about 7 thousand staff between DUB, ORK, SNN and LHR. LHR alone had something like 2,000 staff alone due to the very big 3rd party passenger and cargo operation there. Not to mention Team Aer Lingus. Can't remember the numbers on that. These days there are approx 3,500 EI staff and not all of them are paying into the pension scheme now. The newer staff are offered the option of joining the pension scheme but not all are taking it up. There are about 3,000 paying into the scheme. 3,000 staff paying into a pension for a larger amount of ex staff who are drawing off it doesn't make for a good outcome. I feel sorry for the staff who are paying now and can't remove themselves from the scheme cos there'll be little or no one to pay into a fund for them in the future. I'm sure the DAA staff are in a similar position. Forgive me if my figures are wrong but I'm hearing these numbers from friends still in the company.

[dublinaviator]

@racedo cop on, how would I have any information on potential investors? The bean counters in Goodbodys don't even have that info.

If you read any analysis on Aer Lingus at all, it's been well publicised that the pension deficit is holding back investors. Only last year Willie Walsh ruled out any IAG takeover of Aer Lingus, specifically citing the pension deficit as the main reason. Christoph Mueller himself has highlighted the issue a number of times over the last year at conferences and in several interviews.

Coming to a settlement offers shareholders no form of ROI, but it eliminates a major risk factor and clears the way for investors who would've otherwise looked elsewhere. It is also in the interests of Irish taxpayers that the issue be resolved as soon as possible, as it will remove any barrier to a potential sale of the state's 25% stake in the company and avoid the state having to sell their stake for less than its worth.

[Hangar6]

Share value

I have to say IMHO that share price is benefiting from recent speculation of movement towards this complicated issue being resolved
Fr bid 130 last time and now share price is nearer 160 as a good mgmt
Team work towards a reasonable settlement , the pension hurdle to future
Investors will be resolved which is positive news for anyone interested
In competition in Irish aviation , of course ducksie doesn't lie
Competition at home but that.s life ! Thank god FR were saved by us
Tax payers when it was near collapse and EI as well


Choice for consumers on our wee island is important

[racedo]

how would I have any information on potential investors? The bean counters in Goodbodys don't even have that info.

If you read any analysis on Aer Lingus at all, it's been well publicised that the pension deficit is holding back investors. Only last year Willie Walsh ruled out any IAG takeover of Aer Lingus, specifically citing the pension deficit as the main reason. Christoph Mueller himself has highlighted the issue a number of times over the last year at conferences and in several interviews.

So you have no idea what they will invest in and no idea what they will want in return but you want investors...........

Coming to a settlement offers shareholders no form of ROI, but it eliminates a major risk factor and clears the way for investors who would've otherwise looked elsewhere. It is also in the interests of Irish taxpayers that the issue be resolved as soon as possible, as it will remove any barrier to a potential sale of the state's 25% stake in the company and avoid the state having to sell their stake for less than its worth.

Options are pretty limited for Investors as they need a return and lets face it that only means a trade buyer.................

IAG would then have EVEN more of a monopoly situation at LHR so guess that rules them out as everyone hates a monopoly at one airport n'est pas and they would kill T/A routes.
A Mid East Airline but that is constrained by 49% rule plus potential of any US rules as well
LH.................no benefit to them as they had LHR slots and flogged them
AF............no benefit to them

May have missed someone but doubt it.

[Hangar6]

Investors

Ah ducksie surely Mr H has spoken to you , he has to me ....
You know very well who is interested in Increasing their EI share holding stop being obtuse please,

Anyway moving o n aren.t we pleased for EI the gvt didn't blink at that grossly undervalued FR offer ?

[dublinaviator]

Originally Posted by racedo

So you have no idea what they will invest in and no idea what they will want in return but you want investors...........

You're like that guy who argues with people for no reason other than to have an arguement. And you have this tactic of trying to catch people out by asking questions you know they can't answer, such as what investor do Aer Lingus have lined up that's holding off because of the pension deficit? As if I'd know that.

Now we're on to having "no idea idea what they will invest in". Where's that come from?

Let me turn it around. Are you saying nobody wants to invest in Aer Lingus? If so, what's your source to confirm this? Are you saying Willie Walsh never cited the pension deficit as a reason not to invest? Are you saying Aer Lingus presents no opportunities to potential investors and no possibility of a ROI (assuming the pension issue is resolved)? How do you know what IAG, Etihad, or any investment fund wants in return for their investment?

[racedo]

Let me turn it around. Are you saying nobody wants to invest in Aer Lingus? If so, what's your source to confirm this?

Nope never said that BUT you already have investors, they called shareholders.
Any NEW investment would be required to make return for shareholders plus the return for new investors plus return for the business.

Are you saying Willie Walsh never cited the pension deficit as a reason not to invest?

WW a really genuine nice guy but he will answer whatever question you ask him, neither giving any info away nor telling you of his intentions and leave you to interpret it whatever way you like.

He is pretty good at it as well. He has to be as if he made the incorrect comment then IAG could have regulatory problems.

Are you saying Aer Lingus presents no opportunities to potential investors and no possibility of a ROI (assuming the pension issue is resolved)? How do you know what IAG, Etihad, or any investment fund wants in return for their investment?

Ask yourself what they want from it and how soon.
IAG......................slots at LHR plus feed in traffic, Irish T/A traffic dead apart from Irish American cities (NY/Chicago/Bos) and cut employee numbers for a satellite base called Dublin.
Ed......................no comment based on PPruNe rules but beware US everchanging rules
Investment Fund..............lets see a minimum of €5 for every €1 they put in within a 3 year time frame

[Jamie2k9]

Aer Lingus are due to confirm months of speculation next week on plans for 2014.

[dublinaviator]

Hopefully the unions and Aer Lingus will accept the LRC's recommendations and wrap this up once and for all:

?110m recommended for Aer Lingus pension scheme - RTÉ News

[dublinaviator]

I see Aer Lingus have updated their website again. I'm likin' it...

If only they'd make a decent app.