Aer Lingus to get I£100m Bailout?

[The Guvnor]

From today's Scotsman

Aer Lingus in line for government lifeline
Andrew Murray-Watson

THE Irish government is set to hand troubled flag-carrier Aer Lingus an IR£100 million lifeline, in an attempt to prevent the airline falling into bankruptcy, it was revealed yesterday.

The move follows EU approval of the Belgian government’s €125 million (£78 million) rescue package for Sabena, which is being classified as a loan.

Irish public enterprise minister, Mary O’Rourke, told the Da'l that yesterday’s Luxembourg meeting of EU transport ministers ruled that any aid given by governments to crisis-hit carriers had to meet criteria set by the European Commission affecting a possible distortion of competition between air operators.

In Sabena’s case, the loan was approved because it had already sought protection from creditors - something Aer Lingus wants to prevent - and was being used to dramatically restructure the airline.

O’Rourke said: "We have an extremely short time span in which to find solutions to this very critical situation and significant work must be undertaken in the coming week."

Aer Lingus has already confirmed that 2,500 jobs - 40 per cent of the workforce - will be axed in an attempt to save the ailing carrier.

The minister confirmed she would next week ask prime minister Bertie Ahern and his cabinet to agree in principle to guarantee a commercial loan for Aer Lingus to deal with redundancy payments and working capital.

Earlier she said the company was losing IR£2 million a day and in a "very grave" position, with money set to run out in a matter of weeks.

Any state handout to Aer Lingus will be bitterly opposed by low-cost rival Ryanair. It yesterday said it would take legal action to block the loan to Sabena, and will take a similar approach to any handouts by the Irish government.

Ryanair chief executive Michael O’Leary described the Sabena handout as "a waste of money" and added the loan would be used by the flag carrier to offer lower fares on routes serviced by the low-cost airline.

[EI - E I - O]

Bottom Aer Fungus, will get the dosh and Micheal will get his landing charges waivered and he may even get his very own terminal!

[JRF]

I think this is totally wrong, EI should be shut down. They are going to get all this dosh and blow it just like they have been doing over the past few years. If the government is going to bail them out, then the government should take control of the company and fire ALL current managemet. EI is a joke, they are loosing hand over fist and Ryan Air is making money! What is wrong with this picture?

[akerosid]

Wrong JRF. Aer Lingus has certainly been inefficient, but that is not necessarily the fault of management. It has not been able to consider compulsory redundancies before now, because of union opposition and the government effectively OK'd this. Furthermore, they are still lumbered with the Shannon stopover policy. This is still relevant because the airline still have to fly half empty 330s from SNN as the price of direct flights from Dublin.

Aer Lingus is as efficient as the gov't allows it to be. It has undoubtedly made strides over the last decade and it is unfortunate that events - F&M and terrorism have come together to destroy its efforts, but that is the way it is.

It's still by no means certain that the loan guarantee will be allowed, but horse-trading will be necessary and I am hoping that one of these conditions will be the ending of the 1 for 1 linkage on Shannon.

[BavarianBoy]

Unfair competition me thinks. I hate to see any carrier go under but EI and Sr etc do not... actually never made money apart from the odd year and therefore have to go. If any Govt hands out cash then it has to be across the board to all carriers.
Good luck to all the EI crews, always polit and very professional, unfortunate scenario.

Rgds BB

[xbxex]

Aer Lingus provided possibly the best service I've ever enjoyed onboard an airliner.
They're definitely worth helping out.
Good luck to all in Aer Lingus!

[go with the flow]

hey light wing,

with that heart on your sleeve exactly what kind of "service" did you get?!

although I heard that the service on Air NZ once used to have a "touch of class"

:D

[Bigpants]

Having been made redundant myself I do not take the matter lightly But.....every time the likes of Sabena and Aer Lingus are given government money someone else suffers.

For example all the other carriers on those routes that have to survive in the market on their own merit. So yes there will be jobs lost but in the UK rather than Dublin or Brussels and at the end of this will the customer have benefited?

[fionan]

[QUnfair competition me thinks. I hate to see any carrier go under but EI and Sr etc do not... actually never made money apart from the odd year and therefore have to go.Actually BavarianBoy Aer Lingus made a profit every year since 1994 until the foot and mouth crisis savaged Ireland's primary industry this year.As the only shareholder the government pocketed this which adds to more than the 1993 package (175m) and the rumoured (125m) forthcoming package.All this with 2000+ too many staff (government employment agency) and the Shannon stop with no compensation (government employment agency),I'd say the management have performed a minor miracle over the years.

Incidentally LH and Transavia are proposing 4-day week type schemes whereby the respective welfare depts. will pay welfare for the 5th day.Is this state aid??

What do you think "what is it doing now?" ;) ;) ;)

[sabenapilot]

I am absolutely 100% against the pointless and illegal dramatic lack of funding for public companies like Aer Lingus, Alitalia, Sabena, Olympic etc.