Aer Lingus Turn to Alchemy to Rescue Themselves
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Aer Lingus Turn to Alchemy to Rescue Themselves
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.
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.
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Guvnor I think you should consider buying it.
After all with your expertise I'm sure you could turn the place around! And you don't have to go to all the hassle of setting up your own company...it's all there...everything you need to realise your dreams of world aviation domination is right there in place.
Think about it...you'd probably get it for £250M...brand new well maintained fleet with full spares inventory (no clapped out high maintenance L10-11's),.... all the transatlantic routes in place already....existing support infrastructure...safe and well trained crews...crap management, but you can replace all of them easily with your buddies like 411A...revenue earning training facilities like the simulators...FLS maintenance on site at EIDW...and it's reputed to have £850M quid in cash!! (The pensions are well funded and fattened up too).
It's a bloody bargain Guv!! Surely you could raise a poxy £250M?
Go on...think of it as a challenge...we're dying to see you do it!!
After all with your expertise I'm sure you could turn the place around! And you don't have to go to all the hassle of setting up your own company...it's all there...everything you need to realise your dreams of world aviation domination is right there in place.
Think about it...you'd probably get it for £250M...brand new well maintained fleet with full spares inventory (no clapped out high maintenance L10-11's),.... all the transatlantic routes in place already....existing support infrastructure...safe and well trained crews...crap management, but you can replace all of them easily with your buddies like 411A...revenue earning training facilities like the simulators...FLS maintenance on site at EIDW...and it's reputed to have £850M quid in cash!! (The pensions are well funded and fattened up too).
It's a bloody bargain Guv!! Surely you could raise a poxy £250M?
Go on...think of it as a challenge...we're dying to see you do it!!
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Actually, EI sold off the family silver long ago and has no real assets to its name. The aircraft are all leased, as are its spares, buildings and even the simulators. Team Aer Lingus went long ago to FLS.
Whilst the company might well have had I£850 (which would be diminishing on a daily basis) the fact of the matter is that now it apparently doesn't have sufficient cash to pay off the staff it plans to lay off (a problem also faced by Air Canada).
Incidentally, the transatlantic op - including all those run-out L15s - was budgeted at just 10% of the value you attribute to EI. Given the choice between the two I guess I won't be heading for EIDW!
Whilst the company might well have had I£850 (which would be diminishing on a daily basis) the fact of the matter is that now it apparently doesn't have sufficient cash to pay off the staff it plans to lay off (a problem also faced by Air Canada).
Incidentally, the transatlantic op - including all those run-out L15s - was budgeted at just 10% of the value you attribute to EI. Given the choice between the two I guess I won't be heading for EIDW!
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Is that the same "Alchemy" who lost the "battle" to buy Rover? Maybe AER Fungus should approach MGRover MD John Towers - he made money with Rover when BAe owned it and he seems to be pulling them round now.
St John, patron saint of apparently lost causes.
St John, patron saint of apparently lost causes.
