IAG bids for Aer Lingus

Brennans Row · 21-12-2014 7:19pm

If the Aer Lingus Board see the British Airways bid as a hostile one and they are eager to keep their independence, then they have two options to counter it.

Firstly, sell their Heathrow slots to the DAA (Aer Rianta International) and then lease them back on short-term leases.

Secondly, Aer Lingus should either invest their large cash reserves or reduce them by paying higher dividends to their shareholders.

Only then would we see how genuinely interested British Airways are in Aer Lingus as an Irish based airline.

This way Aer Lingus would be safe from asset stripping.

The Heathrow slots are of strategic importance to the Irish economy because of its worldwide connectivity.

21-12-2014 9:04pm

Why would Aer Lingus (airline) sell their slots to the DAA (an Airport Operator)? Technically they would be relinquishing control of their own slots to someone else who could in theory sell them to someone who offers big money:

Have you forgotten BA fly to Heathrow ?

You've also suggested giving away their savings or investing it frivolously, but what happens if this scares buyers away and another contraction in the aviation industry happens because Europe and the USAs economies continue to slump ? Both markets that they are heavily invested in, how do they stave off closure if they get caught with no savings ?

Yes heathrow has connectivity but equally so does Paris, Amsterdam, Frankfurt, Dubai, Abu Dhabi, Madrid, Helsinki, Rome, New York and soon to Addis Abba, the world doesn't revolve around Heathrow.

I wouldn't worry about these low ball offers they will be batted away until a true and proper offer is placed for the airline.

Brennans Row · 21-12-2014 11:02pm

Deleted User wrote: »

Why would Aer Lingus (airline) sell their slots to the DAA (an Airport Operator)?

Mutual (Irish) self interest?

Deleted User wrote: »

You've also suggested giving away their savings or investing it frivolously,

Please quote exactly what I suggested and not what you thought you read!

Deleted User wrote: »

I wouldn't worry about these low ball offers they will be batted away until a true and proper offer is placed for the airline.

For you it seems that this takeover is a foregone conclusion once the share price is right.

Since we have no idea as to what British Airways plans to do with Aer Lingus, it would be naive to rule out asset stripping as one possible scenario.

Tenger · 22-12-2014 1:39am

man98 wrote: »

.....there'll only be 1 player in the bigger TATL market, if you're flying to Vancouver for example, they'll want you to fly DUB - LHR - YVR, instead of DUB - JFK - YVR with EI/ UA for example.

If the takeover happens then IAG are still a winner, DUB-JFK-YVR with EI and AA (?) or DUB-LHR-YVR with EI and BA!

Brennans Row wrote: »

Mutual (Irish) self interest?
.....

Very doubtful. EI shareholder may not like EI seling their assets to another company.

And apart from the Irish Govt and FR the majority of other shareholders are in this game to make money.....if they can get 2.60+ per share for what has been worth well under 2 Euro for the last 2-3 years they will accept the offer.

Crumbs868 · 22-12-2014 7:43am

Would be interested to see the passenger numbers on dub to lhr since etihad and Emirates arrived / scaled up to 2 flights a day. Surely the 1,000 people per day now flying to the Middle East has eaten into BAs share of irish travellers heading east. Maybe iag see the takeover as a way of getting back some of that lost traffic.

roundymac · 22-12-2014 11:54am

What would prevent the DAA from selling on those slots if EI were to sell them. Also I have a feeling that those slots can only be sold to another airline, otherwise you would see pension companies trying to invest in them.

smurfjed · 22-12-2014 11:58am

Maybe iag see the takeover as a way of getting back some of that lost traffic.

Look at their fares and you might see another reason why they have lost a lot of traffic.

How many of the investors will sell out once the share price hits 2.50 / 2.60, thats almost double what they were in October?

Tenger · 22-12-2014 12:20pm

roundymac wrote: »

What would prevent the DAA from selling on those slots if EI were to sell them. Also I have a feeling that those slots can only be sold to another airline.......

LHR slots are a funny thing. While yes certain airlines have ownership of certain slots, these airlines can also lose them. Each airline must use the slots a certain amount of times per year otherwise they get returned to the common pool for allocation.
EG. We hear the EI have 23 slot pairs......but they don't actually have 23 flights into LHR every day. (12-14 from DUB?, 3-4 from ORK? 2-3 from SNN? 3 from BHD?)
So you might see a slight variation in schedule ex-DUB over the course of a week. EG, EI might use the 2030 arrival into LHR slot mid-week but then use the 2055 arrival on Friday, Saturday and Sunday. Thus both slots are utilised but EI doesn't have to operate both flights every day.

Brennans Row wrote: »

.....For you it seems that this takeover is a foregone conclusion once the share price is right. .....

Well looking forward, a takeover of EI was always going to happen. Its the nature of global market forces. The question is 'who?'
IAG, AF/KLM, LH Group, Ethiad, random asset stripping hedge fund..... it will happen at some point. Fro a Govt point of view (as a major shareholder) they will want good return on their shareholder and some sort of agreement on connectivity maintenance.

man98 · 22-12-2014 12:58pm

4 from Cork, 3 from Shannon, 3 from Belfast I think , Tenger. Not 100% on the BHD frequency.

22-12-2014 1:32pm

Tenger wrote: »

LHR slots are a funny thing. While yes certain airlines have ownership of certain slots, these airlines can also lose them. Each airline must use the slots a certain amount of times per year otherwise they get returned to the common pool for allocation.
EG. We hear the EI have 23 slot pairs......but they don't actually have 23 flights into LHR per day. (12-14 from DUB?, 3-4 from ORK? 2-3 from SNN?)

Some are leased out if I remember correctly.

22-12-2014 1:32pm

Brennans Row wrote: »

Mutual (Irish) self interest?

Please quote exactly what I suggested and not what you thought you read!

For you it seems that this takeover is a foregone conclusion once the share price is right.

Since we have no idea as to what British Airways plans to do with Aer Lingus, it would be naive to rule out asset stripping as one possible scenario.

Secondly, Aer Lingus should either invest their large cash reserves

That's investing frivolously as you haven't suggested anything worth while investing in.

reduce them by paying higher dividends to their shareholders.

That's giving away their money

Mutual (Irish) self interest?

What's to stop the DAA selling them to Emirates or BA or anyone if the offer was high enough considering that BA already serve London Heathrow from Dublin.

For you it seems that this takeover is a foregone conclusion once the share price is right.

Considering the Government has said their share of Aer Lingus is up for sale then Yes.

Brennans Row · 22-12-2014 9:55pm

Deleted User wrote: »

That's investing frivolously as you haven't suggested anything worth while investing in.

Oh come on now, your use of the word “frivolously” does not make any sense here.

Since I have not suggested any example of Investment in the first place, it therefore can't merit to be frivolous.

Deleted User wrote: »

That's giving away their money

Whose money?

The owners of the company are called shareholders and all monies received from the company are called dividends.

The shareholders elect a board of directors to run the company.

Deleted User wrote: »

What's to stop the DAA selling them to Emirates or BA or anyone if the offer was high enough considering that BA already serve London Heathrow from Dublin.

Well, I have more trust in the DAA (Aer Rianta International) with these Heathrow slots, because they would be seen to be a “friendly company” (white knight in takeover jargon) to an independent Aer Lingus.

British Airways on the other hand will more than likely transfer these Heathrow slots away from Aer Lingus to other BA routes overtime.

Deleted User wrote: »

Considering the Government has said their share of Aer Lingus is up for sale then Yes.

Yes I just read this, where the Government (Department of Finance) included their shareholding in Aer Lingus among assets to be sold under the State Asset Disposal programme, but agreed that the stake would only be sold when market conditions were favourable and if acceptable terms and an acceptable price could be secured. (Draft National Aviation Policy)

Then all we now need to know is what the Department of Transport would consider to be acceptable terms (i.e. an independent Aer Lingus or a subsidiary of BA)

highlydebased · 22-12-2014 11:48pm

Not so long ago they disposed of slots for a 0650 departure and 2200 arrival. Don't they have another set leased to United?

Zonda999 · 23-12-2014 4:15pm

A quick point here as regards the Heathrow slots. If i'm not otherwise mistaken, the number of frequencies between DUB & LHR is higher than ever is it not, counting both EI and BA frequencies? (BA have made active increases in frequencies since taking over from BD) A substantial market is being served here through these, be it either O&D or connections.

Why exactly would IAG be so willing to remove frequency from this route given it'll only be pushing the connecting passengers onto other carriers going transatlantic ex DUB (UA, Delta, AA, EI themselves etc..), or going East ex DUB (TK, EK & EH). There are plenty other options than Heathrow for the significant Dublin to London O&D market also.

Put simply, I have no doubt BA gets a pretty significant number of connecting passengers from all of EI's LHR operations. Theres a huge Irish market being served through this and IAG cutting slots will literally be giving this traffic on a plate to other carriers that will transit through through other hubs

LXFlyer · 23-12-2014 4:30pm

highlydebased wrote: »

Not so long ago they disposed of slots for a 0650 departure and 2200 arrival. Don't they have another set leased to United?

But both those slots are still active EI services?

There is still an 06:50 service ex-LHR and a 20:50 departure ex-DUB.

Over the winter the maximum services on any day from Heathrow is a total of 21 split as follows:

Dublin - 11
Cork - 4
Shannon - 3
Belfast - 3

There are additional slots for the summer period.

highlydebased · 23-12-2014 5:34pm

lxflyer wrote: »

But both those slots are still active EI services?

There is still an 06:50 service ex-LHR and a 20:50 departure ex-DUB.

.

Indeed those are the times so something must have happened that they were kept. http://www.routes-news.com/news/1-news/1360-aer-lingus-seeks-to-pass-on-heathrow-slot-pair-to-ba

I've scoured the net and can't find any official indication that the deal was sealed.

basill · 23-12-2014 6:20pm

The government are on record as saying that any "agreement" (and I use that term loosely) regarding the preservation of LHR slots is not worth the paper it's printed on once they have sold their shares. Could well be back to the ferry or 500 quid fares but that is the fundamental problem when you live on a small island on the edge of Europe.

Van.Bosch · 23-12-2014 7:48pm

basill wrote: »

The government are on record as saying that any "agreement" (and I use that term loosely) regarding the preservation of LHR slots is not worth the paper it's printed on once they have sold their shares. Could well be back to the ferry or 500 quid fares but that is the fundamental problem when you live on a small island on the edge of Europe.

Even if IAG dropped every service to Iteland there would still be Ryanair etc so the ferry seems a bit extreme!

L1011 · 23-12-2014 9:03pm

Van.Bosch wrote: »

Even if IAG dropped every service to Iteland there would still be Ryanair etc so the ferry seems a bit extreme!

With no competition there is no reason for any airline to be cheap. LCY doens't suit everyone and the cheap fares will end; we'd have very little else bar FR if EI went.

basill · 23-12-2014 11:15pm

Luton, stansted and Lgw don't really suit if you fancy connecting through with a full service carrier and avail of interline benefits.

24-12-2014 12:26am

basill wrote: »

Luton, stansted and Lgw don't really suit if you fancy connecting through with a full service carrier and avail of interline benefits.

Why does it have to be London could it not be done through Paris, Frankfurt, amsterdam, Madrid, Dubai, New York, Helsinki, Rome etc ?!

Van.Bosch · 24-12-2014 2:09am

basill wrote: »

Luton, stansted and Lgw don't really suit if you fancy connecting through with a full service carrier and avail of interline benefits.

So the ferry would be better? I suspect people would go via another hub and avoid IAG totally, doesn't sound like a good plan.

man98 · 24-12-2014 2:15am

Van.Bosch wrote: »

So the ferry would be better? I suspect people would go via another hub and avoid IAG totally, doesn't sound like a good plan.

Given my geographical location, I'd take the ferry if I were travelling to Britain were prices to rise. I've never flown to Britain before, and if the need arose and the price had gone up I'd be inclined to use the ferry over plane. (Bus ticket, waiting around at the airport, being stuck in STN). Given my experience on these ferries I'd imagine quite a bit of the south east would head for Rosslare rather than paying quite a lot for Ryanair were it to go through. Just my 2 cents.

David086 · 09-01-2015 8:07pm

Second bid rejected.

http://www.independent.ie/business/irish/aer-lingus-rejects-second-takeover-offer-from-british-airways-owner-iag-30895964.html

smurfjed · 09-01-2015 8:16pm

EI trading at 2.50 this afternoon, will be interesting to see how high the share price goes.

18MonthsaSlave · 09-01-2015 9:30pm

I really worry for Aer Lingus once they are sold. Ryanair can easily afford to flood most of their overlapping routes with 9,99 euro fares for a year or more and soak up a few million passengers.
They might leave them alone and let them get on with their own business or they might wipe them out. It's like living next door to an anti-social bollox who you are frightened might take a dislike to you.
IAG must have a similiar sort fear at the back of their minds and that would factor in to the price they'd pay for Aer Lingus.

Zonda999 · 09-01-2015 9:37pm

I'd share your fears but I don't think EI should have much more reason to be scared that many other airlines across Europe that FR could wipe out if they wished to.

roundymac · 09-01-2015 9:45pm

Zonda999 wrote: »

I'd share your fears but I don't think EI should have much more reason to be scared that many other airlines across Europe that FR could wipe out if they wished to.

Lufthansa being a case in point.

BonkeyDonker · 10-01-2015 7:32pm

Zonda999 wrote: »

I'd share your fears but I don't think EI should have much more reason to be scared that many other airlines across Europe that FR could wipe out if they wished to.

Aer Lingus have already proven they can deal with Ryanair - while the battle is not over, nor will it ever be, there are better opportunities for Ryanair in other parts of Europe and they will focus there for the time being.

18MonthsaSlave · 10-01-2015 8:18pm

You are deluded if you think Aer Lingus can "deal with" Ryanair.
The situation as it is as the moment is similar to the one that existed between Microsoft and Apple after M$ bought in to Apple. M$ could have obliterated Apple at the time but bought in to them as it suited them strategically.
Ryanair's forced divestment of their shareholding in Aer Lingus is bad news.
After the sale they go back to being rivals.
IAG aren't white Knights coming in to protect Aer Lingus.
Holding under 30% of Aer Lingus stock was a very nice consolation prize for Ryanair instead of owning it outright and in some respects was even better than owning it outright as things were less political for them.
Aer Lingus did well out of the Ryanair ownership of their stock as it was effectively a truce between the two companies which allowed Aer Lingus to work on their internal problems and protected them from other hostile takeovers/preadators.

IAG bids for Aer Lingus

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