MarkD
1st Sep 2003, 20:47
http://www.timesonline.co.uk/article/0,,2095-798087,00.html
Aer Lingus to use cash to buy fleet
Jane Suiter
AER LINGUS is set to spend its €300m cash reserves on a new fleet of aircraft for its European routes. The airline’s management will place a proposal before its board at the end of September outlining the preferred package.
Observers believe that Airbus, the European consortium, is the slight favourite over Boeing, the US manufacturer, in the race to supply the state-owned airline with at least 35 new aircraft.
A source close to the company said it had not ruled out the possibility of borrowing some of the funds that would be required to finance the deal but that its preference was a lease arrangement paid out of cash flow.
The board also “favours” using the cash reserves in Aer Lingus’s accounts.
Stephen Furlong, an airline analyst at Davy Stockbrokers, said the new fleet should result in significant operating efficiencies for Aer Lingus.
He added that this was an opportune time to replace aircraft given the competition between manufacturers who had hit lean times following the downturn in the international aviation industry.
With competition between the big two manufacturers intensifying Aer Lingus could look forward to securing the keenest possible package.
Analysts say Aer Lingus, which recently announced profits of €17m for the first six months of this year, could afford to buy 10 aircraft from its existing cash resources, while leasing the balance. It has narrowed its purchase decision down to two types of aircraft: the Airbus A320 and the Boeing 737-800.
Aer Lingus currently operates a mix of 27 aircraft from different manufacturers in its short-haul and medium-haul fleet. The decision to go with either Airbus or Boeing is intended to yield savings on the costs of fleet maintenance.
Aer Lingus to use cash to buy fleet
Jane Suiter
AER LINGUS is set to spend its €300m cash reserves on a new fleet of aircraft for its European routes. The airline’s management will place a proposal before its board at the end of September outlining the preferred package.
Observers believe that Airbus, the European consortium, is the slight favourite over Boeing, the US manufacturer, in the race to supply the state-owned airline with at least 35 new aircraft.
A source close to the company said it had not ruled out the possibility of borrowing some of the funds that would be required to finance the deal but that its preference was a lease arrangement paid out of cash flow.
The board also “favours” using the cash reserves in Aer Lingus’s accounts.
Stephen Furlong, an airline analyst at Davy Stockbrokers, said the new fleet should result in significant operating efficiencies for Aer Lingus.
He added that this was an opportune time to replace aircraft given the competition between manufacturers who had hit lean times following the downturn in the international aviation industry.
With competition between the big two manufacturers intensifying Aer Lingus could look forward to securing the keenest possible package.
Analysts say Aer Lingus, which recently announced profits of €17m for the first six months of this year, could afford to buy 10 aircraft from its existing cash resources, while leasing the balance. It has narrowed its purchase decision down to two types of aircraft: the Airbus A320 and the Boeing 737-800.
Aer Lingus currently operates a mix of 27 aircraft from different manufacturers in its short-haul and medium-haul fleet. The decision to go with either Airbus or Boeing is intended to yield savings on the costs of fleet maintenance.