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Ryanair bid for Aer Lingus

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    #62
    ballooba
    Registered Users Posts: 6,315 ✭✭✭ballooba


    jackofalltrades wrote: »
    Given the state of the economy i'd say there's little demand for a non-LCC carrier. I also don't think that a new carrier could over any kind of significant increase in routes served out of Ireland.
    Some of us have to travel for work. It's not a holiday despite what some people may think. I would prefer to have a non-LCC option, but for most routes out of Ireland it's Ryanair or Aer Lingus.


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    #63
    ballooba
    Registered Users Posts: 6,315 ✭✭✭ballooba


    bk wrote: »
    ballooba I note that you still haven't answered my very simple question:

    How does it benefit the Irish public to go from having two major Irish airlines to just one major Irish airline?
    I thought I had. Aer Lingus are not a major airline in any sense of the word. We would benefit greatly from having two major airlines making a concerted effort to serve this market, but we don't. We have one major airline and one minnow.


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    #64
    LXFlyer
    Registered Users Posts: 17,546 ✭✭✭✭LXFlyer


    While you may not like them, then please appreciate the fact that many of us do appreciate/enjoy using Aer Lingus to travel to/from Ireland and do not want it subsumed into Ryanair.


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    #65
    bk
    Moderators, Motoring & Transport Moderators, Technology & Internet Moderators Posts: 22,467 Mod ✭✭✭✭bk


    ballooba wrote: »
    Some of us have to travel for work. It's not a holiday despite what some people may think. I would prefer to have a non-LCC option, but for most routes out of Ireland it's Ryanair or Aer Lingus.

    First of all Aer Lingus product is a lot better then Ryanair, more comfortable and more civilised. Their Transatlantic offerings are actually quiet excellent, certainly far better then the US carriers.

    I think Aer Lingus have actually found a pretty good balance between quality of product and cost.

    I normally take Aer Lingus for business trips and either Ryanair or Aer Linugs for pleasure.
    ballooba wrote: »
    I thought I had. Aer Lingus are not a major airline in any sense of the word. We would benefit greatly from having two major airlines making a concerted effort to serve this market, but we don't. We have one major airline and one minnow.

    No, that still doesn't answer anything.

    In the wider world of airlines Aer Lingus might be small, but from Ireland they have the size, scale and market share of a major airline.

    So please explain in detail how them being subsumed into Ryanair benefits the Irish travelling public?

    It is a simple question that you have yet to answer,


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    #66
    bmaxi
    Closed Accounts Posts: 3,859 ✭✭✭bmaxi


    MYOB wrote: »
    Said commentators claimed there wasn't any chance of the deal being blocked last time

    The OFT are almost certainly going to order them to divest their shareholding anyway, so there isn't a hope this is going to suceed.

    O'Leary takes expensive chances all the time





    /QUOTE]

    Call me a cynic but I always think that where political expedience is involved, decisions of EU agencies are not always true to form and political expedience is involved here. What happens in the UK is a different matter.


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    #67
    n97 mini
    Registered Users Posts: 8,295 ✭✭✭n97 mini


    bk wrote: »
    Actually, this isn't certain at all. Ryanairs market share increase has stagnated recently. Ryanair currently has no new orders for new aircraft so they can't actually expand further for the next few years, not without buying out other airlines.

    They have a number of large new competitors coming along. Norweigan, the low cost Scandinavian airline has put in an order for 300 aircraft, the biggest aircraft order ever and they will likely replace Ryanair as the biggest airline in Europe.

    Then you have the likes of Wizz Air, who are busily copying Ryanairs low cost model, but doing so out of even cheaper locations in Eastern Europe, with Eastern European pilots, cabin crew, engineers, etc. and thus Eastern European wages.

    Things aren't looking so hot for Ryanair at the moment.

    From that post I don't know why anyone is worried about a small regional airline being bought out. Sounds like Ryanair has plenty of competition, present and future.


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    #68
    ballooba
    Registered Users Posts: 6,315 ✭✭✭ballooba


    bk wrote: »
    No, that still doesn't answer anything.

    In the wider world of airlines Aer Lingus might be small, but from Ireland they have the size, scale and market share of a major airline.
    They don't have a worthwhile frequent flyer offering and they don't fly where I want to go. There is a whole wide world outside of the US and Europe.
    bk wrote: »
    So please explain in detail how them being subsumed into Ryanair benefits the Irish travelling public?

    It is a simple question that you have yet to answer,
    If there were major change to Aer Lingus under Ryanair then it would open the market to new entrants or an expansion by smaller players. I have said this multiple times.


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    #69
    etchyed
    Registered Users Posts: 674 ✭✭✭etchyed


    ballooba wrote: »
    ...it would open the market to new entrants or an expansion by smaller players. I have said this multiple times.
    And it has been pointed out to you multiple times that this would not be possible. Why are you still not addressing this?


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    #70
    bk
    Moderators, Motoring & Transport Moderators, Technology & Internet Moderators Posts: 22,467 Mod ✭✭✭✭bk


    ballooba wrote: »
    They don't have a worthwhile frequent flyer offering and they don't fly where I want to go. There is a whole wide world outside of the US and Europe.

    And how exactly will Ryanair buying Aer Lingus change any of that?

    Ryanair also don't have a frequent flyer offering and Ryanair will likely close Aer Lingus routes, so you will actually have less choice. They would also likely scrap code sharing and the frequent flyer program on transatlantic, so you end up with even less of this.

    The presence of both Ryanair and Aer Lingus doesn't stop any other airline coming in and offering routes. Just look at the recent Ethiad and Emmirates routes out of Dublin.

    As you said yourself there is plenty of spare capacity at Dublin Airport.

    You seem to be under the mistaken view that if you eliminate Aer Lingus it will leave space for big operators to enter the market, but that isn't the case. They can enter the market any time they like already. Ryanair consuming Aer Lingus doesn't change any of that and just makes it worse.

    If what you want is a better frequent flyer program, more connections and code sharing and more routes, then you should want Ethiad to buy Aer Lingus not Ryanair. Ryanair won't get you any of these things. Ethiad might.

    All Ryanair buying Aer Lingus will gain you is less choice flying in Europe and more expensive ticket prices flying in Europe. Given that 80% of flights out of Dublin are to Europe, it will mean very bad news for the majority of the Irish travelling public.

    I see zero benefit in this to the Irish travelling public and I've yet to see you give a good solid reason how eliminating a major airline in Ireland benefits anyone?


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    #71
    Capt'n Midnight
    Moderators, Recreation & Hobbies Moderators, Science, Health & Environment Moderators, Technology & Internet Moderators Posts: 90,714 Mod ✭✭✭✭Capt'n Midnight


    n97 mini wrote: »
    From that post I don't know why anyone is worried about a small regional airline being bought out. Sounds like Ryanair has plenty of competition, present and future.
    The concept is simple.

    An airline can charge more on routes it has a de facto monopoly over. It can use this extra profit to subsidise routes it wants to defend or when muscling in on someone else's territory.

    Dublin - London is in the order of 4 million passengers. If you can raise the average air fare by just a fiver, then after five years you'll have cleared €100 million.

    And Ryanair offer apex fares at the old price but still easily sneak in a fiver on 'optional' extras and ramping the price of tickets up a few days earlier and all the usual carry on they are known for.

    Add in the value of the Heathrow slots, the cash and short haul aircraft held by Aer Lingus and it's a no brainer. They could then sell on the rest to Ethiad.


    Would that work Ryanair and Ethiad splitting Aerlingus such that Ryanair had no competition on Dublin-London ?


    Yes it would be nice if Ryainair had a no prebooking shuttle service to London from Baldonnel.

    Ryanair would have more leverage with Aer Rianta too and you can't see them not trying to use it, even if it's just for free publicity.



    How much are the Heathrow slots worth ?
    If they were sold straight off how much would it really cost to pay for Aer Lingus and how long would it take Ryanair to make that much money.


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    #72
    L1011
    Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 67,697 Mod ✭✭✭✭L1011


    n97 mini wrote: »
    Well, if the rest of what you say is true, then it's going to be the same for every other airline, or even worse, as their costs/prices are higher to begin with. Ergo, Ryanair's market might be smaller, but their market share -- as per my original question -- might be bigger.

    Other airlines do not rely on skinning airports for subsidies or below-cost operations. Ryanair does.

    Their business model is fundamentally different to other airlines, and its reached its limit.


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    #73
    bk
    Moderators, Motoring & Transport Moderators, Technology & Internet Moderators Posts: 22,467 Mod ✭✭✭✭bk


    I've just realised how ridiculous Ryanairs offer is. Ryanair are offering €700 million to buy Aerlingus. But Aerlingus currently has:

    - Over 1 billion in cash on hand.
    - The fleet is worth about 1.4 billion on the second hand market!!
    - Never mind all the other assets and property Aerlingus own.

    So for a mere €700 million, Ryanair would take in 1 billion in cash. Could then fire all the staff and sell the fleet for 1.4 billion and then sell of all the other property and assets making them hundreds of millions more.

    And on top of that they eliminate a major competitor and get to raise prices.

    Nice, where can I get a bargain deal like this.

    And all for no benefit to the people of Ireland.


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    #74
    devnull
    Moderators, Motoring & Transport Moderators Posts: 11,586 Mod ✭✭✭✭devnull


    Aer Lingus lease a good percentage of their fleet so the whole fleet cannot be regarded as assets.


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    #75
    n97 mini
    Registered Users Posts: 8,295 ✭✭✭n97 mini


    bk wrote: »
    I've just realised how ridiculous Ryanairs offer is. Ryanair are offering €700 million to buy Aerlingus. But Aerlingus currently has:

    - Over 1 billion in cash on hand.
    - The fleet is worth about 1.4 billion on the second hand market!!
    - Never mind all the other assets and property Aerlingus own.
    Have they any liabilities? Pensions for example?


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    #76
    Tarabuses
    Registered Users Posts: 724 ✭✭✭Tarabuses


    bk wrote: »
    I've just realised how ridiculous Ryanairs offer is. Ryanair are offering €700 million to buy Aerlingus. But Aerlingus currently has:

    - Over 1 billion in cash on hand.
    - The fleet is worth about 1.4 billion on the second hand market!!
    - Never mind all the other assets and property Aerlingus own.

    So for a mere €700 million, Ryanair would take in 1 billion in cash. Could then fire all the staff and sell the fleet for 1.4 billion and then sell of all the other property and assets making them hundreds of millions more.

    And on top of that they eliminate a major competitor and get to raise prices.

    Nice, where can I get a bargain deal like this.

    And all for no benefit to the people of Ireland.

    The latest Balance Sheet shows shareholders' funds of €836,721.


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    #77
    ballooba
    Registered Users Posts: 6,315 ✭✭✭ballooba


    etchyed wrote: »
    And it has been pointed out to you multiple times that this would not be possible. Why are you still not addressing this?
    Why or how is it "not possible"? This statement seems to assert with certainty what will happen in the future. Or do you meant that it is unlikely? That is a matter of opinion?


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    #78
    ballooba
    Registered Users Posts: 6,315 ✭✭✭ballooba


    bk wrote: »
    And how exactly will Ryanair buying Aer Lingus change any of that?
    ...
    The presence of both Ryanair and Aer Lingus doesn't stop any other airline coming in and offering routes. Just look at the recent Ethiad and Emmirates routes out of Dublin.
    If Ryanair get rid of Aer Lingus, then it opens up a market for these airlines. If they don't then it's not really worse than the status quo from my perspective.
    bk wrote: »
    You seem to be under the mistaken view that if you eliminate Aer Lingus it will leave space for big operators to enter the market, but that isn't the case. They can enter the market any time they like already. Ryanair consuming Aer Lingus doesn't change any of that and just makes it worse.
    Mistaken in your opinion, which you are entitled to. We're talking about hypotheticals here so anything is possible to some degree.
    bk wrote: »
    If what you want is a better frequent flyer program, more connections and code sharing and more routes, then you should want Ethiad to buy Aer Lingus not Ryanair. Ryanair won't get you any of these things. Ethiad might.
    I do, but they haven't made an offer and nothing seems forthcoming. They may be in a holding pattern until the Ryanair issue is dealt with, but we don't know.
    bk wrote: »
    All Ryanair buying Aer Lingus will gain you is less choice flying in Europe and more expensive ticket prices flying in Europe. Given that 80% of flights out of Dublin are to Europe, it will mean very bad news for the majority of the Irish travelling public.
    I used to have to connect via Heathrow myself before we had some decent connections from the Middle Eastern airlines. Aer Lingus couldn't sustain the Dubai route. Personally speaking, the less time I have to spend of my life in Heathrow, the better.


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    #79
    ballooba
    Registered Users Posts: 6,315 ✭✭✭ballooba


    I wonder why no one else has ever thought about asset stripping Aer Lingus? The markets must just be missing it's intrinsic value. Stupid markets.


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    #80
    L1011
    Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 67,697 Mod ✭✭✭✭L1011


    ballooba wrote: »
    I wonder why no one else has ever thought about asset stripping Aer Lingus? The markets must just be missing it's intrinsic value. Stupid markets.

    Because not enough shares are available openly to even try. This happens frequently. Three examples I can think of easily:

    1: Cable & Wireless spent a long time being worth less than their cash reserves, let alone assets, not enough shares available for someone to take them over

    2: Racal were worth less than their Vodafone stock

    3: 3Com were worth less than their Palm stock

    The latter two ended up doing massive corrections to rectify the situation but they didn't get asset stripped, neither did C&W,


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    #81
    L1011
    Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 67,697 Mod ✭✭✭✭L1011


    n97 mini wrote: »
    Have they any liabilities? Pensions for example?

    Up to the courts to decide. The penion liability that people claim is Aer Lingus's in its entirity (including MOL in many of his rants about the one airline he can't seem to beat)

    a: Is for a fund that shared between their staff, those of the DAA and those of SRTechnics
    b: May not need to be filled by Aer Lingus at all.


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    #82
    etchyed
    Registered Users Posts: 674 ✭✭✭etchyed


    ballooba wrote: »
    Why or how is it "not possible"? This statement seems to assert with certainty what will happen in the future. Or do you meant that it is unlikely? That is a matter of opinion?
    This is what you keep saying, but it's not a matter of opinion, it's a matter of fact. It's what happens in unregulated markets where one player is overly dominant. Like I said before, basic concepts of fair competition, which you seem to be completely ignoring.


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    #83
    ballooba
    Registered Users Posts: 6,315 ✭✭✭ballooba


    MYOB wrote: »
    Because not enough shares are available openly to even try.
    I was being a bit disingenuous, Ryanair do have a blocking stake at the moment. If the regulator blocks them then perhaps they'll divest their stake and it opens up the field. Etihad just increased their stake in Virgin Australia to 10%. Either of those airlines (EY/VS) would be great from my perspective. I just don't buy into the hysteria about a Ryanair takeover, its not ideal but at least it might move things along.


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    #84
    Capt'n Midnight
    Moderators, Recreation & Hobbies Moderators, Science, Health & Environment Moderators, Technology & Internet Moderators Posts: 90,714 Mod ✭✭✭✭Capt'n Midnight


    n97 mini wrote: »
    Have they any liabilities? Pensions for example?
    Pensions ?

    Companies have been raided before just to grab the pension fund assets.

    Something like buy company, strip assets, sell company - management 'buy out' or some such to have full control of the process - couple of years later "Oops we're broke"



    You only have to look at Eircom to see how asset stripping works, even better if you can convince a proportion of the employees that it's in their interest.


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    #85
    bk
    Moderators, Motoring & Transport Moderators, Technology & Internet Moderators Posts: 22,467 Mod ✭✭✭✭bk


    ballooba wrote: »
    If Ryanair get rid of Aer Lingus, then it opens up a market for these airlines. If they don't then it's not really worse than the status quo from my perspective.

    How is that, as you yourself said already, the market is already open and there is plenty of space in Dublin Airport for other airlines to enter the market if they want.

    All Ryanair would do is remove competition and choice, theis isn't good for anyone but Ryanair.

    No offence, but I honestly think you are being very naive as to what will happen if Aerlingus is taken out. Very few airlines want to go head to head against Ryanair and definitely not in their own back yard.

    Really what airline do you think is going to transfer 45 aircraft to Dublin, employ thousands of ground staff, etc. just to get into a bloody price war with Ryanair? I'll tell you, no one.


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    #86
    Capt'n Midnight
    Moderators, Recreation & Hobbies Moderators, Science, Health & Environment Moderators, Technology & Internet Moderators Posts: 90,714 Mod ✭✭✭✭Capt'n Midnight


    bk wrote: »
    So for a mere €700 million, Ryanair would take in 1 billion in cash. Could then fire all the staff and sell the fleet for 1.4 billion and then sell of all the other property and assets making them hundreds of millions more.
    There's the goodwill and the Heathrow slots too

    Firing staff wouldn't be that difficult

    after some asset stripping you can split the airline in two - long and short haul

    sell off the long haul as a going concern - lump in the brand name etc. to extract profit , burden it with liabilities if you can , pension plan , back office staff

    standardise on 737's for the short haul fleet - which you merge into ryanair (staff will backstab to get into the long haul half) - all the Airbus pilots and maintenance people are now redundant, they can re-apply for jobs on 737's if they have the skills - not sure how relevant the skills from the last time Aer Lingus had 737's would be


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    #87
    ballooba
    Registered Users Posts: 6,315 ✭✭✭ballooba


    bk wrote: »
    How is that, as you yourself said already, the market is already open and there is plenty of space in Dublin Airport for other airlines to enter the market if they want.
    It's not an open market, because Aer Lingus is there providing a mediocre service to an undiscerning market. Aer Lingus also attracts some latent ill placed patriotism. Its goodwill has outlasted its continuing benefit, as often happens in business.


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    #88
    Capt'n Midnight
    Moderators, Recreation & Hobbies Moderators, Science, Health & Environment Moderators, Technology & Internet Moderators Posts: 90,714 Mod ✭✭✭✭Capt'n Midnight


    ballooba wrote: »
    I just don't buy into the hysteria about a Ryanair takeover, its not ideal but at least it might move things along.
    Let's make this really simple.

    Easyjet have never flown to Dublin




    When they and GO tried the other airports Ryanair offered €0.00 seats long enough to kill the competition
    http://www.boards.ie/vbulletin/showthread.php?p=69084315
    http://www.airliners.net/aviation-forums/general_aviation/read.main/5045520/

    With Aer Lingus gone there won't be any other low cost airline.


    In the UK they have https://en.wikipedia.org/wiki/Pension_Protection_Fund
    given how badly our financial regulators have been and how we usually lag behind UK legislation I'm not so sure if a pension fund could be made safe it it already hasn't been


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    #89
    ballooba
    Registered Users Posts: 6,315 ✭✭✭ballooba


    Capt'n Midnight wrote: »
    With Aer Lingus gone there won't be any other low cost airline.
    You may have missed the bit where I favour a non-LCC alternative.


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    #90
    LXFlyer
    Registered Users Posts: 17,546 ✭✭✭✭LXFlyer


    ballooba wrote: »
    It's not an open market, because Aer Lingus is there providing a mediocre service to an undiscerning market. Aer Lingus also attracts some latent ill placed patriotism. Its goodwill has outlasted its continuing benefit, as often happens in business.

    It's your opinion that they provide a mediocre service.

    Clearly from the passenger numbers an awful lot of people including myself disagree with you.


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    #91
    Capt'n Midnight
    Moderators, Recreation & Hobbies Moderators, Science, Health & Environment Moderators, Technology & Internet Moderators Posts: 90,714 Mod ✭✭✭✭Capt'n Midnight


    ballooba wrote: »
    You may have missed the bit where I favour a non-LCC alternative.
    Aer Lingus is civilised compared to Ryanair and not really that much more expensive if you include onward travel costs.

    Thing is that if there is no competition the non-LCC can rack up their prices too since the main alternative are the cattle trucks.


    It's like expecting train fares to drop after one of the two bus companies drops out after a price war on a route.


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