Proposed sale of Aer Lingus stake / short-haul announcement imminent?

[Nollaig]

From this morning's Irish Times - it also mentions that Airbus is likely to be announced as the 'chosen supplier' of the short-haul fleet.


http://www.ireland.com/newspaper/finance/2003/0917/pf190131325BZLINGUSMEN.html

Aer Lingus says sale of stake is the best option
Emmet Oliver
17/09/2003


Aer Lingus has told the Minister for Transport, Mr Brennan, that he should consider allowing institutions take a minority stake in the airline.At a meeting yesterday the airline's chairman, Mr Tom Mulcahy, and chief executive, Mr Willie Walsh, told the Minister a flotation, management buy-out or trade sale were not right for the company in the current environment.


The Aer Lingus representatives told the Minister that selling to outside investors was the best option, but they offered the advice only in the context of the Government formally deciding to sell part of the airline.

Selling a stake of between 20 and 30 per cent is the most likely option, said sources. The three are planning further discussions in the coming weeks and Mr Brennan will also brief the Minister for Finance, Mr McCreevy, and Government colleagues.

While the decision is ultimately for the Government, there is little support in the airline or in the Department of Transport for flotation. While the controversial flotation of Eircom is one consideration, sources pointed out that few IPOs were in the pipeline in Ireland generally.

The airline's management is opposed to the MBO option and a trade sale is regarded as unsuitable because other airlines are under serious financial pressure and are unlikely to make attractive bids.

Sources said the Department of Finance favoured a sale because it could raise significant funds at a time when the budgetary position is bleak.

However, no decision is expected in time for this year's budget. "It is now a live issue; up to now there have been all kinds of suggestions, now the matter has come on to the political agenda for real," said a source.

In a document presented to Mr Brennan the airline says it has no immediate capital requirements and consequently any sale would result in a benefit to the Exchequer. A price tag of about €600 million has been put on Aer Lingus by aviation analysts in recent months.

The Government owns just over 85 per cent of the airline and the discussions are concerned with what to do with this stake. Further meetings with the Minister are planned, but sale of the 14.9 per cent owned by the employees is not on the agenda.

Meanwhile, the company is close to closing a deal to renew its short-haul fleet. The Irish Times understands Airbus, and not Boeing, will be the chosen supplier and an official announcement is imminent.

The airline is expected to spend in excess of €300 million on a range of Airbus craft. The deal is understood to be a blend of outright purchase and lease. The airline is expected to fund the purchase from its reserves.

Aer Lingus currently operates Boeing, Airbus and BAE aircraft, which all require different maintenance regimes. Aircrew must also be trained to operate the various planes. A single fleet would radically reduce these costs.




© The Irish Times

[Tom the Tenor]

The aeroplanes are going to be A320s in single class layout with the A321s going back as part of the deal.

[trustno1]

I hear it's 17 A320's. These will be in addition to the current A320/321 fleet.

[Nollaig]

Heard the same story, and understand that the announcement may be made later today (Wednesday)

[Bluehair]

Its not on the EI website yet but has been announced on RTEs Aertel news service;

http://www.rte.ie/aertel/p105.htm

Aer Lingus has confirmed it is to
acquire 17 new Airbus A320 aircraft for
its European fleet in a multi-million
euro deal.

The airline is also to add 15 new
routes to Europe over the next two
years.

The deal involves purchasing seven of
the aircraft outright and leasing 10.

The new aircraft will be brought
onstream by the end of 2005, at which
point Aer Lingus will no longer fly
Boeings or British Aerospace aircraft
in its fleet.

[INLAK]

17 new A320`s ( + 10 options) in addition to the 6 A321`s and 4 A320`s already operated. 7 bought outright, with 10 leased from ILFC.

Single fleet by the end of 2005, and 15 new routes by summer 2005.

More info here. (http://www.rte.ie/news/2003/0917/aerlingus.html)and here (http://www.onbusiness.ie/2003/0917/aerlingus.html)

[mr Q]

CONFIRMATION
Aer Lingus to buy 17 aircraft
Ulster Television Online

Aer Lingus, the Irish Republic's national airline, is to buy 17 aircraft from the Airbus European plane-maker in a multi-million pound deal.
The new A320 aircraft will be used in the state-backed carrier`s shorter-haul European fleet, which is being expanded to fulfil 15 anticipated new routes over the next two years.

New destinations under consideration are understood to include Berlin, Dubrovnik, Athens, Krakow and Bilbao.

The Airbus deal involves purchasing seven of the aircraft outright and leasing the remaining 10 - as well as an option on a further 10 planes.

The new aircraft will start operating by the end of 2005 when Aer Lingus will no longer fly Boeings or British Aerospace aircraft in its fleet.

The Airbus contract will leave the airline`s fleet at 27 A320`s and seven long haul A330`s by 2005.

The terms involve Aer Lingus selling seven of its 11 Boeings to International Leasing Finance Corporation in a cash deal to be concluded in January next year.

A buyer is still being sought for the remaining four Boeings. Six remaining British Aerospace aircraft are to be decommissioned at the end of next month.

Although the value of the deal has not been disclosed, the cash purchase of seven A320`s - based on list prices - would cost around £245 million (euro350 million).

But the deal, clinched after a contest between Airbus and Boeing, is believed to have incorporated a heavy discount dimension because of the current depressed state of the aviation industry.

The fleet overhaul co-incides with the continuing transformation of Aer Lingus into a profitable business, offering cheaper, ``no-frills`` fares after years of losses in the face of stiffening competition from budget airlines like local rivals Ryanair.

Last month, Aer Lingus reported an interim profit of £10 million (euro14.3 million), after a loss of £8.8 million (euro12.6 million) a year earlier.

Aer Lingus chief executive Willie Walsh said: ``It is an excellent financial deal achieved at precisely the right time in the industry cycle.

``The move to a single aircraft type is a key element in our business strategy bringing very significant cost savings while increasing capacity.``

The deal is subject to Irish government approval but the first aircraft delivery is expected next year.

The Irish airline already flies Airbus on its long haul routes, but the short haul fleet is currently split between Boeing, Airbus and British Aerospace craft.

[Nollaig]

The official AL announcement (from http://www.flyaerlingus.com/cgi-bin/obel01im1/Corporate/display_news.jsp?BV_SessionID=@@@@1155718402.1063804899@@@@&BV_EngineID=ccckadcjgkljillcefecfigdffgdfkg.0&P_OID=-8049&Category=0&NEWS_OID=536883273) is set out below.

One question - according to the website, AL currently has 31 short haul aircraft, so in net terms (i.e. after purchase of firm orders and disposal of the 146, 734 and 735 models) the short haul fleet would appear to have dropped to 27 - is this interpretation correct??


Fleet deal reinforces transformation to low fares airline - 15 new routes based on improved flexibility and increased capacity

Aer Lingus today announced that, subject to Board and shareholder approval, it had concluded a deal with Airbus to supply the airline's new European fleet. The deal, which reinforces the transformation of Aer Lingus into a low fares airline, will see the airline transition to a single fleet type for its European operation by the end of 2005 and add 15 new routes to its rapidly expanding network by Summer 2005.

This will bring to 30 the number of new routes opened by Aer Lingus since the end of 2001.

Under the deal Aer Lingus will acquire 17 A320 aircraft of which seven will be purchased outright and ten will be leased from ILFC. Together with the six A321s and four A320s already in the fleet this will mean a total short-haul fleet of 27 Airbus aircraft. The deal also includes options for a further ten A320 aircraft.

Aer Lingus also announced that engine manufacturer, CFM, will provide the engines for the new fleet as part of the proposed deal.

Announcing the conclusion of a comprehensive and highly competitive fifteen month process, Aer Lingus Chief Executive Willie Walsh said: "I am delighted at the outcome of this process. It is an excellent financial deal achieved at precisely the right time in the industry cycle. Most importantly, it reinforces the transformation of Aer Lingus into a low fares airline that offers a way better service."

"The move to a single aircraft type is a key element in our business strategy bringing very significant cost savings while increasing capacity and greatly improving our operational flexibility. On the basis of this decision we will open fifteen new European routes over the next two years, adding to the fifteen new routes we have opened over the past two years."

"In summary the new fleet means more passengers availing of more direct routes at even lower fares." Willie Walsh concluded.

Dublin, 17th September 2003

[MarkD]

Nollaig

the decrease in aircraft on hand is tempered by the easier coping with an aircraft going u/s or a crew member becoming unavailable having a like for like replacement handy. The fleet quoted on the EI website is not generally accurate if that's what you're counting from btw. EI has cut some routes (LCY/LGW) and reduced frequencies to make way for the new destinations.

[st patrick]

EI currently operates 10 320/1+11 737+6 146 = 27.
The figure on the offical website probably includes the 2 146s returned last year along with the 2 737s sold in early 2002. The guy responsible for updating that part of the site probably took the redundancy package in Jan 2002 !!:p

[hobie]

love your sense of humour St. Pat !!!!! ...... lol

cheers .... hobie .....

[akerosid]

Today's Indo is reporting that EI is to begin reviewing its t/a fleet from next month. In light of y'day's A320 deal, more A330-200s and the replacement of the older -300s by A330-300ERs can be expected. This will be of considerable interest to manufacturers, given EI's plan to increase its t/a routes considerably with the advent of open skies.

However, I wonder if y'day's Airbus deal may have dented chances of opening two new gateways this Winter or concluding a mini-deal with the US, as had been expected.

The Indo did carry a rumour a few weeks back that EI was looking at seven Boeings (they said 747s, but presumably meant 777s), so maybe EI might try to play politics. However, this seems unlikely as it would mess up commonality and EI will probably get open skies in the medium term anyway.

[MarkD]

Will A330-300ER make LAX from DUB? A332 seems to do so easily. If so, and CPT/NRT/HKG never happen, then an all A333/333ER fleet might do, giving more seats for WW to put bums on!

[akerosid]

The current 333 can actually make LAX nonstop, although it's only a last ditch option, since there are serious capacity constraints and I think it would have to be done with reduced catering and freight.

The 333ER, with an extra 18,000kgs of payload, should be able to do it without too much difficulty and since LAX is the longest US trip, it would be able to do any other route, such as SFO, SEA, DEN etc. - without capacity constraints. With the 320s for s/h, can't see them surrendering that commonality for 777s. If they need something larger than 333s, they may at some stage go for 346s, but I don't see it happening soon. I would imagine that the earlier 333s will be replaced by 333ERs and more 332s would be sought.

Heard today, incidentally, that Cityjet are moving back onto the DUB-LCY route. There was also an EMB170 in Dublin y'day, presumably demonstrating to Cityjet, which is also hosting an ERA conference this week.

[st patrick]

Interestingly enough, the EMB 170 (and its variants 70-115 seats) will be able to do approaches steeper than that required at LCY. This is thanks to an airbrake fitted under the fuselage - cant for the life of me remember the technical name for it! They have one fitted to one of the test aircraft.