!! Ryanair Makes 3rd Bid For Aer Lingus !!

[quantumofcheese]

Just heard it on RTE news, announced to the Irish Stock exchange a few minutes ago.

Ryanair makes all cash offer for Aer Lingus valuing the airline at €649m - RT News (http://www.rte.ie/news/2012/0619/ryanair-makes-all-cash-offer-for-aer-lingus.html)

Ryanair makes all cash offer for Aer Lingus valuing the airline at €649m

[dublinaviator]

Already posted in Aer Lingus thread - http://www.pprune.org/airlines-airports-routes/459473-aer-lingus-6-a-31.html

[quantumofcheese]

Probably deseves its own thread!

Well here we go again :rolleyes:

[j636]

o dear does MOL have lots of cash laying about as he can't agree a new plane order although what he is offering for EI wouldn't make much differance to there accounts. Why even make the offer other than to get PR as everybody knows it will never happen....

If it went ahead they would have market share of 84% at Cork, 78% at Dublin and 64% at Shannon.

[racedo]

Given LH can buy who it likes, BA likewise and get UK govt always approving, Air France doing what it likes in connivance with Franch state then FR taking over EI is a small event................apart from on here where western civilisation is threatened forever.

[fishtits]

http://www.rte.ie/news/2012/0619/ryanair-makes-all-cash-offer-for-aer-lingus.html (Ryanair makes cash bid for Aer Lingus)

End of Aer Lingus as we know it? :(

[mart901]

One flag carrier buying up another with little overlap in business is totally different to wiping out pretty much your only oponant. The big green monster that MOL just can't beat!

[Skipness One Echo]

Irelands main carrier, Ryanair, no competiton, no alternative. Racedo, seriously, come on, BA, AF and LH are legacy network, EI is half way to a loco, FR is beyond loco in it's own dark dimension. You are comparing apples with .....cyanide?

[pwalhx]

We have to be realistic here and accept we will not see a negative response in regard to Ryanair from racedo, so accept his stance whether we agree or not, it won't change.

[doniedarko]

Highly unlikely. O'Leary has made so many friends in Government(Dublin), Brussels ,London and Abu Dhabi that they are unlikely to let him get his way. This is called Karma :p and its about time it gave MOL some payback ....:ok:. Last time he tried this stunt he lost so much money the board nearly had his job:E

[peacock1]

........nope, this being their 3rd bid, when it fails, they are precluded from further bids under stock exchange rules. It's just the end of RYR messing with EI.

[PPRuNeUser0176]

The Government are coming under pressure to block it and its speculated that Ryanair are doing it so they can get rid of there share in the airline and get 200 million of the 400 million they spent on shares back.

[mart901]

Its all publicity as well!

[racedo]

Irelands main carrier, Ryanair, no competiton, no alternative. Racedo, seriously, come on, BA, AF and LH are legacy network, EI is half way to a loco, FR is beyond loco in it's own dark dimension. You are comparing apples with .....cyanide?

Minor carrier attempted takeover .........thats it.

There is something else in play at the timing if you know how to read it.

As for the BA / LH / AF all supported and allowed do what they want by their Govts.

[racedo]

Last time he tried this stunt he lost so much money the board nearly had his jobhttp://images.ibsrv.net/ibsrv/res/src:www.pprune.org/get/images/smilies/evil.gif

Laughable in the extreme

Who came out of it better EI or FR ?

[Just a spotter]

As an Irish consumer, Ryanair's arrival to the market brought greater choice and price competition (although they do now tend to ward off new entrants).

But, I don't relish the prospect of FR taking over EI. Anyone here remember Buzz?

January 2003, The Daily Mail

Ryanair Chief Executive Micheal O'Leary said: 'The timing of this acquisition is opportunistic. Since Ryanair is growing strongly by rolling out our lowest fare services all over Europe, the last thing we need is the distraction of an acquisition. 'However, there are a number of features of buzz which makes this a favourable move at this time'. He described the deal as 'a bargain, if we can - as we expect - turn it around in one year'.
True low cost: Ryanair buy buzz for a 'bargain' £15m | Mail Online (http://www.dailymail.co.uk/travel/article-589550/True-low-cost-Ryanair-buy-buzz-bargain-15m.html)



February 2003, The Guardian

The budget airline Ryanair announced today it was axing 12 routes and cutting 400 jobs on its rival carrier Buzz, which it is taking over on April 1. Ryanair also confirmed that it was grounding all Buzz flights "for the month of April 2003, at least". The Irish low-cost airline added that a final decision would follow soon "on whether to restart [Buzz] flying on May 1, or close Buzz altogether". Ryanair to cut Buzz routes and jobs | Travel | guardian.co.uk (http://www.guardian.co.uk/travel/2003/feb/26/travelnews.theairlineindustry)


March 2003, The Guardian

The future of Buzz was on a knife-edge last night, as many staff refused to meet a 6pm deadline to sign new contracts offered by Ryanair, which is buying the struggling low-cost airline for £15m. Ryanair's chairman, Michael O'Leary, has threatened to close the airline unless staff comply with his terms. He will announce on Monday whether he is pressing ahead with his threat.
Buzz staff defy Ryanair's deadline | Business | The Guardian (http://www.guardian.co.uk/business/2003/mar/15/theairlineindustry)


Buzz continued on for another 18 months before being killed off. I wonder would EI last as long under FR's ownership.

[carlrsymington]

If Ryanair do win, close EI and "persuade" all Irish airport operators to give them a better deal. Mr Ambrose at BHD must be reaching for the phone and a glass of the hard stuff at this news.

[Lord Lardy]

I would suspect that the competition referral last Monday has prompted today's announcement. It seems to me that whoever is advising Ryanair has expressed concern about a possible negative outcome from the UK Competitions crowd. Better to put your cards on the table now before any ruling and get a reasonable price for their investment or risk a forced sale at below market value in the future. It might force another investors hand. Can't see any other reason for such a move other than this.

[DollarBill]

I think Lord Lardy has it spot on, FR see a possible stumbling block ahead so create a fuss to raise shareprice so they get out with a little more than they expected a few months back.

As for the figure of E694M, according to the last set of EI results they have over 1 Billion Euro in cash reserves. (Plus 60% of their aircraft owned rather than leased)

[ayroplain]

On mature reflection I hope this proposed takeover fails. As one who relies on Ryanair to get me to my destinations on time every time and at a (mostly) reasonable price I certainly do not want their operations to be contaminated by the culture of Aer Lingus trade unions. Remind me whose turn it was to threaten yet another strike action this week.

[BigFrank]

"O'Leary has made so many friends in Government(Dublin), Brussels ,London and Abu Dhabi that they are unlikely to let him get his way." says DD.

But what about his free loan of a Ryanair plane to swish the Transport Commissioner of the EU around during the last Irish EU referendum.

Was that done out of the profound charitable instincts of MOL's religious soul ?

Or was it more akin to a business deal as in the case of Rupert Murdoch dealing with Thatcher/ Blair/ Brown/ Cameron ?

[PPRuNeUser0176]

Aer Lingus board have say Ryanair's offer undervalues the airline as they have €1 billion sitting in the bank and they only offered over €600 million.

[racedo]

Aer Lingus board have say Ryanair's offer undervalues the airline as they have €1 billion sitting in the bank and they only offered over €600 million.

As usual Aer Lingus being economical................Aer Lingus net position at end of March in their own statements were €450m (€1002m v €556m debt) of which €155m is advanced ticket sales for Q2 and Q3 so real position was €300m.

Investor Relations - Investor Relations - Corporate Aer Lingus (http://corporate.aerlingus.com/investorrelations/)

For those who wish to do their own searching.

[EISNN]

Racedo is the debt not from aircraft purchased? Would the aircraft have an asset value then, no?

[racedo]

Racedo is the debt not from aircraft purchased? Would the aircraft have an asset value then, no?

Doesn't matter because if you flog off all the aircraft you still have to repay the loans and you have to hope what you sell can pay the loans.

Given fleet age average is 6.5 years then in current market you take your chances.

[EISNN]

Does anyone know what aircraft Aer Lingus own that money has to be paid back on? ie how old are they? There were a good few aircraft bought in recent times how many of those make up the debt? It's just so as to get a better idea of how much money could be made back if they were to be sold off.

[PPRuNeUser0176]

They own 60% of there fleet. I know the 3 A321 are leased and some A320. Almost sure they own all the A330. 2 A320 leases will end lather this year and the 2 A319 will replace them. They also have an A320 for sale. The 4 A319 are leased also.

[EISNN]

well if (and that's a big IF) that's the case surely the debt would be more than covered by the sale of the aircraft that don't suit the FR model, Ryanair then gets near to €1 billion in cash gross or €400 million in cash net which ever way you want to look at it plus whatever monies are left over from the sale of the aircraft after the debts are paid off.

Anyway, I don't see it happening ........ look at Olympic and Aegean in Greece ...... not allowed to merge. BA and BMI merger is apples and oranges in comparison due to there being more local and foreign operators (EasyJet, Ryanair, Virgin, Lufthansa, KLM, Aer France, Jet2, Flybe and let's not forget to mention the charters) in the UK than there is in Ireland or Greece and in turn allowing for competition. In Ireland and Greece with only two major players in both countries holding anything up to 80% of the operations in each country it wouldn't be healthy and FR would no doubt turn into one of the monopolies that Michael O'Leary speaks of at such great length given any opportunity such as the DAA and might I add ...... RIGHTLY SO.

My thoughts on it are this: the UK competition authorities are now investigating the FR shareholding in EI. Odds are that FR will be told to sell most if not all of their shares in EI. So FR announces a 'large' offer of €1.30 a share for the remaining 70%. FR could now be quietly selling/dumping their shares at the 1.05 a share that they are at the moment as that's probably the best offer they'll get cos when/if the UK competition authorities tell FR to sell the share price in EI would drop as FR are forced to sell their shares.

These are only my thoughts on it but maybe someone else has another theory. I'm keen to hear others opinions and thoughts on what's going on at the moment.

Another thing. Is it true that after you've made three attempted take overs you can't attempt a fourth by law? A friend of mine who works in EI was telling me this yesterday. It kinda makes sense but at the same time I'm not sure. I'm not familiar with company take overs or the law in these matters.

[MarkD]

Does IAG have the cash and inclination to step in? It's not like they don't have someone who knows where the bodies are buried at EI.

[clipstone1]

IAG doesn't have the inclination, it said the pensions cost had put it off last year I seem to remember

[Jack1985]

IAG doesn't have the inclination, it said the pensions cost had put it off last year I seem to remember

And how do you know this is the case now? The pension issue can be solved quickly and effectively although it would leave many out of pocket going by the current plans for most pension deficits in the public sector in Ireland.

[vkid]

he has competition it seems...from Turkish Airlines. Bit of an odd one imo

Turkish Airlines emerge as contender for Aer Lingus bid | BreakingNews.ie (http://www.breakingnews.ie/business/turkish-airlines-emerge-as-contender-for-aer-lingus-bid-556525.html)

[LGS6753]

Mr Walsh recently ruled out IAG making a further acquisition any time soon, citing under-par performance from Iberia due to the euro crisis, the time taken to integrate BMI, and general economic uncertainty.

They have therefore withdrawn from the TAP acquisition, and have nothing to gain from purchasing Aer Lingus.

[floss689]

Would be a good move for Turkish, opening up the North Atlantic for them via DUB.

[davidjohnson6]

Let's assume Turkish has the money, and that the Irish Govt and other major shareholders are willing to sell.

What could Turkish achieve with Aer Lingus that Etihad could not ?
Can Turkish obtain a shareholding of more than 49%, if necessary through various carefully domiciled shell companies, while Aer Lingus retains its traffic rights to/from Dublin and its status as an EU carrier ?
What does Turkish gain by having a 49% shareholding in Aer Lingus ?

[floss689]

It would gain a much less restricted route to north america with open skies if it were to transfer pax in dub onto an EI flight. Similar story for Etihad.

[davidjohnson6]

Forgive me if I'm being very naive, but if Turkish own either 49% or 51% of Aer Lingus, how does the EU-US open skies agreement permit Turkish to take advantage of the transatlantic air transport liberalisation from Dublin airport ? As far as I was aware, there is no immediate prospect of Turkish airlines having rights to fly between 2 EU airports. Turkey is a long way from becoming a full member of the EU.

Turkish as a member of Star Alliance already has capacity to exchange feed with United at Chicago, Washington, Los Angeles and soon Houston, and also flies to JFK. United will open Istanbul-Newark next month. The only flights currently between Dublin and Istanbul is a once-per-day A320 / A321 / B738 which suggests the demand for O&D between these 2 cities is not huge.

Turkish can currently offer direct flights to the USA from Istanbul. Why would Istanbul based passengers put up with changing flights in Dublin ? Why would a passenger from outside Turkey want to change in IST *and* DUB, just to reach a hub in N.America ? Furthermore, by increasing the number of stops, Turkish lose the pricing power that comes from non-stop flights compared to airlines who can provide 1-stop connections

I'm guessing there is something that can be achieved, but I'm afraid I just don't understand the economic rationale for Turkish taking control of Aer Lingus within either the current legal framework, or the legal framework in the next 18 months.

Can someone explain what Turkish gain in more obvious terms please ?

[Jack1985]

Forgive me if I'm being very naive, but if Turkish own either 49% or 51% of Aer Lingus, how does the EU-US open skies agreement permit Turkish to take advantage of the transatlantic air transport liberalisation from Dublin airport ?

Pretty simple really, expand the Aer Lingus transatlantic schedule to new markets e.g. SFO, MIA, DFW etc and fly extra Turkish flights to/from Dublin allowing Turkish Airlines passengers to connect on to Aer Lingus TA services.

[davidjohnson6]

Jack - sounds a bit like Swissair buying a 49% stake in Sabena in 1995... see Google to see what happened next !

[Jack1985]

sounds a bit like Swissair buying a 49% stake in Sabena in 1995... see Google to see what happened next !

Totally different situation compounded by the fact it was a month after the September 11th attacks, Swissair was going to the wall and had no money to takeover Sabena, both were unprofitable regardless. To add to that David, Switzerland has much the same rights as most European carriers with regards CH/US flights, you comparing a Turkish/Aer Lingus takeover with Swissair/Sabena is like comparing apples and oranges.

[VanBosh]

I still don’t get it though – why would passengers in turkey want to change in Dublin to get to America. I can see it if they wanted to fly from IST to somewhere in the States where EI flew to directly then it would work but are you suggesting that Turkish airlines would feed Dublin from other cities?

Passengers in Turkey can currently fly direct to the US with Turkisk airlines and then connect to other US destinations via their Alliance partners. If they took over EI they would have to fly to the Turkish hub in IST (if they didn’t live nearby) fly to Dublin, change there and then onto the States. If thei destination was not a major city they would need to connect again.

Anyway I look at it, stopping in Dublin is an extra connection.

Also if Turkish only own 49% why not fly them to the US directly and pass them to partners there – surely more profitable?

I must be missing something though because I struggled with the Etihad rationale too?

[Jack1985]

I have to say I see no valid reason for Turkish or Etihad for that matter to be interested in Aer Lingus. My views on a Ryanair merger is much the same.

I still don’t get it though – why would passengers in turkey want to change in Dublin to get to America

Precisely. But why else would Turkish be interested in Aer Lingus? The pension deficit although it can be sorted quickly with pain to many employees much offsets the €700m+ in cash reserves which is why many see Aer Lingus as an unattractive airline in merger terms.

I really see no plausible reason for Turkish being interested in Aer Lingus other then the TA services, the airline has good connections existing already between Istanbul and major Star Alliance hubs as has been pointed out.