The Guvnor
14th Oct 2001, 15:06
From today's Sunday Times:
AER LINGUS, the crisis-hit Irish national carrier, has approached a London private-equity house within the past month in a bid to arrange a sale of the business.
Management at Aer Lingus made the approach to Alchemy as the airline prepared to implement a radical cost-cutting plan. The state-owned company, which is losing £1.5m each day,
hopes that restructuring will entice a buyer.
Schroder Salomon Smith Barney approached private-equity houses three months ago in an attempt to find a buyer for the airline. At the time Electra and 3i, the London private-equity houses, looked at Aer Lingus.
The two are now waiting to see what emerges of the airline after the management introduces its cost-cutting regime.
One of the two is also understood to have received an informal approach within the past three weeks from a representative of the airline.
A senior source at Aer Lingus said: "The airline will be much more attractive to a private investor if this plan, including
large-scale redundancies, goes through.
"A sale to a private-equity house would be a very satisfactory solution - there's going to be lots of rich pickings coming out of what happens at the company over the next six months."
But a spokesman for Ireland's Department of Public Enterprise said that the government intended to retain ownership. "There won't be any question of a trade sale of Aer Lingus," he said. "Since September 11 that whole thing has gone off the agenda."
Last week Aer Lingus announced 2,500 job losses, but it does not even have enough money to pay the redundancy costs.
The Irish government is looking for European approval to give state aid to prop up the ailing airline.
Mary O'Rourke, Ireland's public-enterprise minister, is considering the option of guaranteeing a loan to the carrier.
Bookings on Aer Lingus's transatlantic flights, which account for approximately 60% of the airline's profits, have fallen by 80%
since the attacks in America.
AER LINGUS, the crisis-hit Irish national carrier, has approached a London private-equity house within the past month in a bid to arrange a sale of the business.
Management at Aer Lingus made the approach to Alchemy as the airline prepared to implement a radical cost-cutting plan. The state-owned company, which is losing £1.5m each day,
hopes that restructuring will entice a buyer.
Schroder Salomon Smith Barney approached private-equity houses three months ago in an attempt to find a buyer for the airline. At the time Electra and 3i, the London private-equity houses, looked at Aer Lingus.
The two are now waiting to see what emerges of the airline after the management introduces its cost-cutting regime.
One of the two is also understood to have received an informal approach within the past three weeks from a representative of the airline.
A senior source at Aer Lingus said: "The airline will be much more attractive to a private investor if this plan, including
large-scale redundancies, goes through.
"A sale to a private-equity house would be a very satisfactory solution - there's going to be lots of rich pickings coming out of what happens at the company over the next six months."
But a spokesman for Ireland's Department of Public Enterprise said that the government intended to retain ownership. "There won't be any question of a trade sale of Aer Lingus," he said. "Since September 11 that whole thing has gone off the agenda."
Last week Aer Lingus announced 2,500 job losses, but it does not even have enough money to pay the redundancy costs.
The Irish government is looking for European approval to give state aid to prop up the ailing airline.
Mary O'Rourke, Ireland's public-enterprise minister, is considering the option of guaranteeing a loan to the carrier.
Bookings on Aer Lingus's transatlantic flights, which account for approximately 60% of the airline's profits, have fallen by 80%
since the attacks in America.