IAG bids for Aer Lingus

IRLConor · 18-12-2014 4:46pm #1

http://www.irishtimes.com/business/transport-and-tourism/aer-lingus-shares-jump-after-iag-takeover-move-1.2042517

http://www.rte.ie/news/business/2014/1218/667611-aer-lingus-regional-passenger-numbers-up-20/

Trying to grab all the slots in LHR?

L1011 · 18-12-2014 4:55pm

They'd be made divest huge numbers of the slots, and somebody would take them too - it's a lucrative enough market.

IRLConor · 18-12-2014 4:57pm

L1011 wrote: »

They'd be made divest huge numbers of the slots, and somebody would take them too - it's a lucrative enough market.

Ah, I had forgotten about that. That would free up a nice lump sum.

I wonder what chances this bid has of going anywhere.

donvito99 · 18-12-2014 5:36pm

IRLConor wrote: »

I wonder what chances this bid has of going anywhere.

However this goes, MO'L will surely kick up a fuss.

I would again be against a takeover because of the inevitable hike in fares that would follow.

kub · 18-12-2014 6:07pm

A huge reduction in slots for Ireland in Heathrow if this goes through.
Shannon and Cork will be lucky to have 1 a day and Dublin possibly 3.

donvito99 · 18-12-2014 6:35pm

It's also worth noting in the thread at least that the bid was rejected, thread title contrary to the bones of the article.

Jack1985 · 18-12-2014 7:40pm

kub wrote: »

A huge reduction in slots for Ireland in Heathrow if this goes through.
Shannon and Cork will be lucky to have 1 a day and Dublin possibly 3.

Why would IAG even contemplate loosing the feed from ORK/SNN? Dublin maybe but hardly armageddon as above. Anyhow it seems this will go nowhere until/if IAG give a new offer. For EI to reject at the hip this early, gives me the sense the offer was fairly low - As IAG have form in, with there initial VY offers.

Fratton Fred · 18-12-2014 7:57pm

It doesn't matter how interested you are in selling, the first bid is always rejected.

Jack1985 · 18-12-2014 8:04pm

Fratton Fred wrote: »

It doesn't matter how interested you are in selling, the first bid is always rejected.

Very true!

18-12-2014 8:10pm

kub wrote: »

A huge reduction in slots for Ireland in Heathrow if this goes through.
Shannon and Cork will be lucky to have 1 a day and Dublin possibly 3.

Wouldn't matter so much for Dublin as there is also BA to heathrow so realistically they could chop it to zero if they wanted. Bye bye Belfast and probably Shannon and Cork also.

18-12-2014 8:11pm

Fratton Fred wrote: »

It doesn't matter how interested you are in selling, the first bid is always rejected.

And probably the 2nd and 3rd offers as well

basill · 18-12-2014 8:33pm

However this goes, MO'L will surely kick up a fuss.

Could be quite the opposite. Over the past few years he has become quite tight with Willie and has been seen out on regular social occasions.

I would wager that MOL will kick up a fuss in public for the media but that a side deal would be done to benefit FR out of Ireland by IAG.

fr336 · 18-12-2014 8:45pm

So it seems you guys think it could well go through at some stage? Interesting.

smurfjed · 18-12-2014 9:25pm

So thats why the stock price went through 2 euros today.... Thank you IAG

Now if i was only smart enough to know when to sell ..... things would be wonderful

Zonda999 · 18-12-2014 11:57pm

It would be nice to see EI as part of Oneworld again as part of this, but I really don't think this would be the best thing for the business at this time.

man98 · 19-12-2014 1:01am

I'd hate to see Aer Lingus sold off to a big heartless corporation, such as IAG. As pointed out above, it could spell the end for plenty of flights to Heathrow. Not that I'm Aer Lingus's biggest fan, but if nothing is broken don't fix it.

Razor44 · 19-12-2014 1:01am

As a total aviation outsider i still feel IAG taking control of EI isnt such a great thing, ei and thus dublin relegated to futher back water status after all the growth? Or am i way off the mark? Plus fair hikes

Long Time Lurker · 19-12-2014 1:41am

Fratton Fred wrote: »

It doesn't matter how interested you are in selling, the first bid is always rejected.

Yup. And when MOL bid for AE I suspect it had more to do with test casing and setting precedent. A legal lever to use against other airlines should they try to buy AE rather than Actually having it in Ryanair ownership.

galwayjohn89 · 19-12-2014 1:44am

Long Time Lurker wrote: »

Yup. And when MOL bid for AE I suspect it had more to do with test casing and setting precedent. A legal lever to use against other airlines should they try to buy AE rather than Actually having it in Ryanair ownership.

Do you mean Aer Lingus when you say AE?

man98 · 19-12-2014 1:45am

Just a further thought, IAG wouldn't care about developing Dublin as a TATL hub, so if they were to buy you'd start to see Stobart lose their contract sooner rather than later. It'd knock EI off the pedestal, replace them with Ryanair in Dublin.

Long Time Lurker · 19-12-2014 1:46am

Vuzuggu wrote: »

Do you mean Aer Lingus when you say AE?

I do.

Jhcx · 19-12-2014 2:20am

Ok how are iberia doing? They fly to Dublin we have British Airways in Dublin. Is Iberia not being kept separate to British Airways. What has IAG done to threaten the complete dismissal of iberia as a company. They bought it kept it as a separate company to British Airways. Why would this be any different for Aer lingus? just because slots are so precious in Heathrow does not mean the authorities would allow IAG to wipe out EI even in their own home country. the broader picture aer lingus is a very valuable company due to its unique connections and hold over Dublin. It might not have a massive fleet but it has a big impact and being the national flag carrier which all three airlines would be, would be a big plus in the eyes of IAG. It's probably best to have aer lingus under the wing of a company. Part of me feels it could be the worst idea because you don't know which way the coin is going to flip. But if IAG could be a decent company as it makes itself out to be and keeping airlines the way they are only to expand the network and growth could be the best thing for Ei

Tenger · 19-12-2014 2:58am

Zonda999 wrote: »

It would be nice to see EI as part of Oneworld again as part of this, but I really don't think this would be the best thing for the business at this time.

Apart from LHR slots EI don't offer much else to IAG. DUB operates as a competitive option to LHR. (Also EI compete with American out of DUB) This takeover could allow BA to get control of all the feed from Ireland (previously stated as 10% of their total pax) and using some of the EI slots to operate longhaul ex-LHR. The UK competition authority would not view this in the same way as BA taking over Bmi, perhaps Virgin will get thrown some of the slots.

I can't really see how a strong EI helps BA (IAG). If it was Lufty or AF/KLM then you could see them thinking that a strong EI (across the Atlantic) competes with BA/AA in LHR. While I like the idea of DUB operating as a complimentary hub to LHR I don't think Willie Walsh will view it that way. he has previously shown that he has little regard for the shamrock and in fact was ready to drop it in 2003.
In addition looking at the EI positive numbers.....this is base don strong EI Regional feed from the UK (taking pax from BA at LHR), strong connections with United and Jetblue (taking pax away from American)......so taking out this small annoyance could boost both members of the T/A partnership.

Jhcx wrote: »

Ok how are iberia doing? ........................
......... But if IAG could be a decent company as it makes itself out to be and keeping airlines the way they are only to expand the network and growth could be the best thing for Ei

The IAG situation is very much BA taking over Iberia. IAG is a facade to cover the take-over and present it as a merger of equals. Iberia have seen massive salary cuts and fleet disposal since the 'merger'. BA, less so.

Tenger · 19-12-2014 3:14am

On this note.....a move like this was not unexpected. EI are a small airline, but they are a small profitable airline who are performing very well with a cost base below nearly all of their peers in Europe. They have some valuable assets, a large cash pile and those hard to get LHR slots. Thus it was always going to happen that larger airlines/hedge funds with cash to spare would seek to poach them once the pension deficit/responsibility was sorted out.

The Irish Times estimates that the IAG bid is worth approx EUR 1 Bn. Now EI have aircraft assets, at least 12 daily slot pairs at LHR and over EUR 1 Bn in gross cash (approx 450M net cash)........seems like a low ball offer to me?

braddun · 19-12-2014 4:37am

Europe would ban it as Ireland would lose to many heathrow slots

aer lingus has 24 slots

once it took over aer lingus it would try and break it up as it has little value once it loses its heathrow slots

Tenger · 19-12-2014 4:48am

braddun wrote: »

Europe would ban it as Ireland would lose to many heathrow slots....

Europe will not care about "Ireland's slots"

Those slots belong to a private company. The Govt as a shareholder could oppose the takeover unless certain conditions were attached however. IAG could allow EI to keep half of its slots to maintain connectivity...and the facade of competition. BA is already the dominant carrier at LHR, adding 50% of the EI slots will not change that too much statistically.

youreadthat · 19-12-2014 5:18am

Tenger wrote: »

Apart from LHR slots EI don't offer much else to IAG. DUB operates as a competitive option to LHR. (Also EI compete with American out of DUB) This takeover could allow BA to get control of all the feed from Ireland (previously stated as 10% of their total pax) and using some of the EI slots to operate longhaul ex-LHR. The UK competition authority would not view this in the same way as BA taking over Bmi, perhaps Virgin will get thrown some of the slots.

I can't really see how a strong EI helps BA (IAG). If it was Lufty or AF/KLM then you could see them thinking that a strong EI (across the Atlantic) competes with BA/AA in LHR. While I like the idea of DUB operating as a complimentary hub to LHR I don't think Willie Walsh will view it that way. he has previously shown that he has little regard for the shamrock and in fact was ready to drop it in 2003.
In addition looking at the EI positive numbers.....this is base don strong EI Regional feed from the UK (taking pax from BA at LHR), strong connections with United and Jetblue (taking pax away from American)......so taking out this small annoyance could boost both members of the T/A partnership.

The IAG situation is very much BA taking over Iberia. IAG is a facade to cover the take-over and present it as a merger of equals. Iberia have seen massive salary cuts and fleet disposal since the 'merger'. BA, less so.

Because Iberia were in a much worse financial state than BA and needed restructuring.

man98 · 19-12-2014 9:34am

BA competes with EI, as connecting passengers account for 33% of all pax onboard your average EI TATL flight. It's within BA's interests to lure people into LHR or LGW to fly out to North America. While most of these passengers come from UK, it's a conflict of interest. Yes, Iberia still exists BUT that's a different story to Aer Lingus. As far as I know, Iberia are not developing Madrid as a connection hub as they have a customer base already.

L1011 · 19-12-2014 10:13am

man98 wrote: »

It's within BA's interests to lure people into LHR or LGW to fly out to North America.

Nuking connectivity left right and centre to LHR isn't the way to encourage that.

BA would probably be quite happy to get all the remaining MAN/LBA/NCL connecting passengers to connect via DUB if they owned the airline they were connecting to, and push the domestic flights to BACF at LCY. The Scottish routes are long enough distance they'd still be worth it I expect, particularly when you consider EDI is a 767 some flights.

ted1 · 19-12-2014 10:16am

basill wrote: »

Could be quite the opposite. Over the past few years he has become quite tight with Willie and has been seen out on regular social occasions.

I would wager that MOL will kick up a fuss in public for the media but that a side deal would be done to benefit FR out of Ireland by IAG.

Heathrow slots for Ryanair..,

goingnowhere · 19-12-2014 11:24am

Almost had Ryanair at the T1 gates in LHR during a planned strike a while back when O'Leary offered quite a few fully crewed 737-800's

Strike didn't go ahead.

Unclear what IAG really want, clearly want a cut of the action in Dublin with pre clearance as EI has grabbed a fair chunk of the UK regional market. The slots are probably a secondary issue as they well know they will have to hand over a portion like with BMI.

Would IAG merge EI with BA or let it continue to operate as a low cost carrier like Vueling. Could BA's open skies subsidiary be part of the plan http://en.wikipedia.org/wiki/OpenSkies

Van.Bosch · 19-12-2014 12:59pm

My thoughts on the whole thing are:

this wont be the end of it, IAG will be back and i expect will ultimaltely be successful.
They have merged BMI into BA as it had the same hub I'm not sure they would do this with EI.
They may be happy to let EIR keep operating as is and feed their UK regional traffic through Dublin, this in turns frees up slots at LHR (not many) and allows them that piece of the action which they currently dont get.
There may be some form of agreement between EI and Vueling where Vueling feeds Dublin instead of Stobart.
I doubt they would continue the agreement with Etihad and might instead look for a tie up with Qatar so a Dublin doha route could arise.

Crumbs868 · 19-12-2014 1:01pm

basill wrote: »

Could be quite the opposite. Over the past few years he has become quite tight with Willie and has been seen out on regular social occasions.

I would wager that MOL will kick up a fuss in public for the media but that a side deal would be done to benefit FR out of Ireland by IAG.

Good interview here, willie reckons they are not friends more business acquaintances but he may be just saying that
www.businesspost.ie/#!story/Home/News/INTERVIEW%3A+Willie+Walsh%2C+still+flying+high/id/87198161-2385-493e-ed2a-55cc50669678

FO'C: Are you friends with Michael O'Leary?

WW: No. I don't think we would describe ourselves as that. I think we are civil to one another. But we clearly enjoy having a go at one another as well. We can do that . . . we can be pleasant and aggressive with one another without offending one another. And I have always been upfront in acknowledging what he has achieved. I don't agree with everything he has done but you can't take away the success that guy has had. More than anyb

donkey balls · 19-12-2014 1:27pm

Ok so we know that EI has knocked back the offer from the IAG group,No doubt they will make another offer and another and another trying to wear down the EI mgmt & share holders till they get what they want.
Now if you look at the bigger picture and forget about aircraft for a minute,Any time companies merge it leads to redundancies local mgmt cannot make decisions without getting the nod from the head office etc.
It also leads to asset stripping of the company(I have personally witnessed a very good Irish transport company be stripped) this leads to redundancies services cut etc,Despite what the govt media spout on about job creation etc and that the good times are nearly back.
In fact they are not we are still on tender hooks regarding the jobs front,We need to hold on to every job that we can just say the merger went ahead redundancies are sure to follow.
Ok the lads in EI might get a lump sum but what will they do work wise? when looking for another job,There is a very good chance that some of these lads would not get a job due to their age.
It is better to have them employed working till they retire contributing to the country rather than paying them off and have them look for work elsewhere.

intellectual dosser · 19-12-2014 1:28pm

Having our national airline in the hands of an international consortium just doesnt sit well at all.

Am I being old fashioned in saying that a national airline is part of a countries identity?

With 25% we as a country dont hold all the cards, but I simply think it would be wrong to let Aer Lingus go, especially when its profitable and the outlook is positive. We could potentially lose a lot of control in our economic development.

hfallada · 19-12-2014 1:33pm

intellectual dosser wrote: »

Having our national airline in the hands of an international consortium just doesnt sit well at all.

Am I being old fashioned in saying that a national airline is part of a countries identity?

With 25% we as a country dont hold all the cards, but I simply think it would be wrong to let Aer Lingus go, especially when its profitable and the outlook is positive. We could potentially lose a lot of control in our economic development.

Yes. Most national Airlines have gone under. They were only in business due to anti-competitive regulations. A national airline means nothing to most consumers as they are price conscious. Why fly Aer Lingus to the same airports as Ryainair flys to? Aer Lingus planes are generally ancient compared to Ryanair. The difference in quality isnt that large anymore

L1011 · 19-12-2014 1:41pm

Average fleet age is 9 vs. 5.5 years, that's not "ancient" by any means. Regional is now all under 2 years bar one 42

Razor44 · 19-12-2014 1:42pm

Doesnt EI have one of the strongest brands in terms of nationals flying them? Like air france and the french.

Not that it massively matter as were a small country,but just as a point. We like our shamrock

fr336 · 19-12-2014 2:15pm

hfallada wrote: »

Yes. Most national Airlines have gone under. They were only in business due to anti-competitive regulations. A national airline means nothing to most consumers as they are price conscious. Why fly Aer Lingus to the same airports as Ryainair flys to? Aer Lingus planes are generally ancient compared to Ryanair. The difference in quality isnt that large anymore

Aer Lingus hasn't. It got its act together, for want of better terms, and is now thriving. No reason to sell off to the Brits. Not everything in the world should belong to whoever offers the highest price regardless of their nationality, I agree that if possible national airlines should be kept just that.

Van.Bosch · 19-12-2014 2:21pm

fr336 wrote: »

No reason to sell off to the Brits. Not everything in the world should belong to whoever offers the highest price regardless of their nationality, I agree that if possible national airlines should be kept just that.

Too late for that, it is a public company and as a European airline can be bought by any European company/person.

While possibly currently majority Irish owned that wont be the case if the price is right, whether this is in Irelands best interests or not is a differnet point but irrelevant once the company was privatised.

man98 · 19-12-2014 2:25pm

But, at a time when EI is doing brilliantly, why sell it off? The only way is up.

Foggy43 · 19-12-2014 2:25pm

fr336 wrote: »

No reason to sell off to the Brits.

IAG are a Spanish company. BA have no interest in buying Aer Lingus.

fr336 · 19-12-2014 2:28pm

Foggy43 wrote: »

IAG are a Spanish company. BA have no interest in buying Aer Lingus.

As mentioned above BA have more than a controlling stake in IAG in reality.

fr336 · 19-12-2014 2:29pm

man98 wrote: »

But, at a time when EI is doing brilliantly, why sell it off? The only way is up.

Because everything is for sale for the corporations now, including every person on the planet :cool:

intellectual dosser · 19-12-2014 2:33pm

Its been posted here that EI have $450m in cash, does anyone know how much debt they have?

18MonthsaSlave · 19-12-2014 2:45pm

Sell a slot. put an A330 on Dublin-Heathrow and bypass public outrage at loosing slots in Heathrow. Sell the slots or let them stay within the purchasing group and sell on interconnected flights to other destinations via Heathrow.
Aer Lingus crew loose work but this is a private company and they'll do whatever they please.

fr336 · 19-12-2014 3:00pm

intellectual dosser wrote: »

Its been posted here that EI have $450m in cash, does anyone know how much debt they have?

477.6mEURO as at end of 2013.

who the fug · 19-12-2014 3:07pm

Will never happen, how are Fianna Fail keep voters in North Dublin if IAG get Air Fungus.

fr336 · 19-12-2014 3:09pm

who the fug wrote: »

Will never happen, how are Fianna Fail keep voters in North Dublin if IAG get Air Fungus.

Oh dear :eek::P

Tenger · 19-12-2014 3:26pm

who the fug wrote: »

Will never happen, how are Fianna Fail keep voters in North Dublin if IAG get Air Fungus.

Add something to the discussion or stop posting here.

fr336 · 19-12-2014 3:30pm

Tenger wrote: »

Add something to the discussion or stop posting here.

Added information for me, even if conveyed in a Michael O'Leary style fashion perhaps.

IAG bids for Aer Lingus

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