Aer Lingus Sale

jjbrien

Taken from rte.ie

The Dáil has taken the first legal step on the road to privatising Aer Lingus.

Despite Opposition protests, TDs have backed the principles underlying the share sale that would see a majority stake going to private investors.

The Minister for Transport, Martin Cullen, said the public would be able to buy shares subject to a mimimum investment of €10,000 and told TDs he expected the process to be complete by the end of September.
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During a debate, Fine Gael's Olivia Mitchell called on Minister Cullen to withdraw the motion, because she believes it would not give the proper approval for the sale of such shares and would be found to be unlawful if challenged.

However, Mr Cullen said he had legal advice to say the motion was lawful.

Labour's Roisin Shorthall said the Government was reneging on its promise to put money into the Aer Lingus pension fund.

The State will retain at least 25.1% of the shares in the company, and new shares in the airline will be issued.

The exact number of shares to be offered will be decided by the Minister for Transport and the Minister for Finance closer to the time.

SIPTU protest disrupts flights

SIPTU workers at Aer Lingus have returned to work after this morning's protest meeting over the company's planned privatisation.

The work stoppage, which lasted just over an hour, directly hit seven flights in and out of Dublin, Cork and Shannon Airports but many more have been delayed as a result.

The action caused delays of around a hour and a quarter for many of the up to 1,500 affected passengers.

Check-in resumed at Aer Lingus desks in Dublin Airport at 11.15am.

Aer Lingus said it would be processing 26,500 passengers on 78 flights today.

At the protest meeting, SIPTU President Jack O'Connor told his members that the union remain opposed to privatisation.

However, Aer Lingus Chief Executive Dermot Mannion said on RTÉ Radio's Morning Ireland that he believed privatisation would proceed when a deal on working conditions and pensions is agreed with all four unions.

jjbrien

jjbrien wrote:

Taken from rte.ie

The Minister for Transport, Martin Cullen, said the public would be able to buy shares subject to a mimimum investment of €10,000 and told TDs he expected the process to be complete by the end of September.
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That rules alot of people out from buying shares. I would to have loved to put some of my savings into Aer Lingus but not 10k.

oscarBravo

I think that's the point of the minimum investment - to rule out risk-averse investors.

jjbrien

Yes but whay did they not set it at 5K its a significant investment.

oscarBravo

*shrug*

If you're going to pick an arbitrary threshold, one is as arbitrary as the next.

New_Departure06

The sale is necessary because:

A: If the company was in dire straits EU rules would prevent the govt bailing it out. This could be the only way to save Aer Lingus in a future downturn in the aviation sector. The govt is only allowed to invest in good times.

B: The health-service and schools shouldn't have to compete with funds with planes in respect of govt money.

C: The state is inefficient (e.g. money wasted on overspends on roads etc.) and companies are therefore run less efficiently than they could be potentially with more market freedom including more avenues of raising capital.

Aer Lingus will need to replace its fleet and needs capital of around €1 billion and the govt is hardly going to provide that.

Jackie laughlin

As a citizen I strenuously object to my airline being sold or given away. Yes, my objection extends to workers receiving shares which do not belong to them.

It's not a question of investment in schools, hospitals or aeroplanes. The problem is a childlike belief in markets and privatisation. Health is being privatised. Schools may follow. Prime Time last night covered the privatisation of local services via scams involving inefficient management companies.

Waste of public funds in recent years has happened by way of the employment of private companies who fail to deliver or fail to deliver on time. The state is eternally trying to intervene to make markets efficient.

Private enterprise and markets have a huge role in a mixed economy. However, we are relying far too much on simpletons who seem unable to get beyond, "Problem? Privatise!"

sovtek

Even if Aer Lingus is privatized it's still virtually a monopoly on flights out of Dublin...it aint gonna improve that situation one bit. It's only competition is Ryan Air (and they are the worst airline I've ever flown with) and they are trying their best to take over as well.
Private companies are efficient at making money not necessarily providing services.
Air travel is just like public transport and should be in the public hands.
Just look at the American system...it's just as inefficient and unsafe to boot.

my_house

this government really really really seems to be following Margaret Thatchers way of doing business. privatising Air Lingus isnt a good idea imo

Glenbhoy

New_Departure06 wrote:

The sale is necessary because:

A: If the company was in dire straits EU rules would prevent the govt bailing it out. This could be the only way to save Aer Lingus in a future downturn in the aviation sector. The govt is only allowed to invest in good times.

B: The health-service and schools shouldn't have to compete with funds with planes in respect of govt money.

C: The state is inefficient (e.g. money wasted on overspends on roads etc.) and companies are therefore run less efficiently than they could be potentially with more market freedom including more avenues of raising capital.

Aer Lingus will need to replace its fleet and needs capital of around €1 billion and the govt is hardly going to provide that.

A: If the company gets into dire straits it will not be saved regardless - why would it?
B: I agree completely, but why would it compete. Aer Lingus is a very profitable company, it's relatively easy for such a company to raise finance from banks etc. Indeed the national pension fund could loan money at a slightly reduced rate to the airline and we'd all be winners?
C: Why is this? Is it because non-state owned enterprises have less regulations to adhere to (see irish ferries)? Is it not true that Aer lingus is a pretty lean airline, indeed if it was'nt, why would an investor buy shares?
See point B

New Deal, I think your points are quite good (although points B and D are the same imho), my main concern about this sale is:
Aer Lingus is a profitable venture, last year it made €160m, this year €82m. In light of this, why sell - surely it's actually generating money for the state at present. They hope to realise approx. €600m from this sale, that is a pretty irrelevant sum of money in todays environment. Say the airline averages €50m profit for the next 10 years (factoring in interest on the 1bn loan expenditure, and presuming that extra profits don't arise from the investment, in which case one would question the wisdom of investing at all). Then over the next 10-12 yrs the state would bring in similar amounts of money (ignore the time value) and still have the asset. Now I know that professional consultants have worked out the numbers, but still, i don't see the point of selling.

jhegarty

Glenbhoy wrote:

A: If the company gets into dire straits it will not be saved regardless - why would it?
B: I agree completely, but why would it compete. Aer Lingus is a very profitable company, it's relatively easy for such a company to raise finance from banks etc. Indeed the national pension fund could loan money at a slightly reduced rate to the airline and we'd all be winners?
C: Why is this? Is it because non-state owned enterprises have less regulations to adhere to (see irish ferries)? Is it not true that Aer lingus is a pretty lean airline, indeed if it was'nt, why would an investor buy shares?
See point B

New Deal, I think your points are quite good (although points B and D are the same imho), my main concern about this sale is:
Aer Lingus is a profitable venture, last year it made €160m, this year €82m. In light of this, why sell - surely it's actually generating money for the state at present. They hope to realise approx. €600m from this sale, that is a pretty irrelevant sum of money in todays environment. Say the airline averages €50m profit for the next 10 years (factoring in interest on the 1bn loan expenditure, and presuming that extra profits don't arise from the investment, in which case one would question the wisdom of investing at all). Then over the next 10-12 yrs the state would bring in similar amounts of money (ignore the time value) and still have the asset. Now I know that professional consultants have worked out the numbers, but still, i don't see the point of selling.

but you don't have to fund a give away buget to try and buy an election (again).....

BuffyBot

privatising Air Lingus isnt a good idea imo

Why not? Just because?

Akrasia

BuffyBot wrote:

Why not? Just because?

Because the government is hoping to raise about 1.1 billion from the sale of the company, but that company has cost the irish tax payer significantly more than that to build up into what it has become today. Selling at anything less than 15 billion is a massive loss for the tax payer.
Here are some basic facts.
1. A long haul aircraft costs around €220 million to buy from new. Aer Lingus has 7 long haul aircraft (to replace that fleet would cost about 1.5 billion)
2. A short haul aircraft costs around 50-80 million to buy new. Aer lingus has 27 of these aircraft. To replace that fleet would cost at least 17.55 billion euros
3. Aer lingus has slots in major airports around the world that are extremely valuable to asset strippers and competing airliners
The Aer lingus Brand, their staff and company profile are all significant assets, not to mention the significant reserves built up in the staff pension fund.

How, in anyone's planet, could anyone recommend selling 34 fully functioning and fully utilised aircraft, all the service infrastructure and their airport slots to finance the purchase of 5 or 6 new aircraft?


It's absolutely insane

A Dub in Glasgo

oscarBravo wrote:

I think that's the point of the minimum investment - to rule out risk-averse investors.

Does that mean that people who can afford to put €10k in are not risk averse?

If I have €100m, putting €10k into a business might mean I am risk averse
If I have €20k, putting €10k into a business might mean I am not risk averse

The simple point of setting the minimum at €10k is that the government want big business and wealthy individuals to buy rather than 'small' investers.

oscarBravo

A Dub in Glasgo wrote:

Does that mean that people who can afford to put €10k in are not risk averse?

Fair point. Let me rephrase - to rule out risk-averse small investors.

Glenbhoy

Akrasia wrote:

Because the government is hoping to raise about 1.1 billion

Airline valued at 1.1 (maximum value, realistically, 900m), they retain 25.1%, the employees retain approx 15%, therefore only 60% is for sale, hence they'll raise 600m after costs if lucky.

soiaf

Akrasia wrote:

2. A short haul aircraft costs around 50-80 million to buy new. Aer lingus has 27 of these aircraft. To replace that fleet would cost at least 17.55 billion euros

Where are you getting 17.5 billion from? 27 planes would be around 2 billion with the costs you've quoted.

darkman2

It needs to be privitised. Anyone who dosent see that must be living on the moon. Remember the government will still hold a 25% stake to protect strategic interests in the company but Aer Lingus wont exist in 3 years time if it isnt privitised.

Raskolnikov

Akrasia wrote:

3. Aer lingus has slots in major airports around the world that are extremely valuable to asset strippers and competing airliners[/SIZE]

The government are holding on to 25% of Aer Lingus to ensure that our favourable landing slots will not be sold.

Bill McH

darkman2 wrote:

It needs to be privitised. Anyone who dosent see that must be living on the moon. Remember the government will still hold a 25% stake to protect strategic interests in the company but Aer Lingus wont exist in 3 years time if it isnt privitised.

The company is turning a profit and has been for a couple of years. There is no reason that the Government or the National Treasury Management Agency could not invest in the company, to enable them to buy new planes. Given that it is now a fairly healthy company, the airline would also be in a reasonable position to borrow cash in order to buy new planes. There is no reason at all why it will not exist in 3 years if it isn't privatised.

Perhaps you would move yourself forward a few years, darkman2, and tell us what your future plans for the airline would be.

What, for example, will happen in 10-20 years time when the company again needs to replace its fleet? How will that be funded? By bank borrowings? Or by the government selling off the remaining 25%? And how do we protect the vital slots at Heathrow, etc., at that stage?

Cork

will happen in 10-20 years time when the company again needs to replace its fleet?

Aer Lingus may not even be around then.

Airlines come and go. They don't consistantly make money.

As a company - Aer Lingus has already been bailed out by the state.

Aer Lingus's prices in the pre Ryanair era were a rip off.

Let Aer Lingus sink or swim. It is now up to their workers and managemant.

Nuttzz

A Dub in Glasgo wrote:

The simple point of setting the minimum at €10k is that the government want big business and wealthy individuals to buy rather than 'small' investers.

Or they dont want a repeat of the eircom float....

Lots of floats have a minimum investment level, buying €10k worth of shares has the same administration costs as buying €100 worth of shares, not a lot to do with big business tbh just common sense when you are managing a floatation

therecklessone

Bill McH wrote:

And how do we protect the vital slots at Heathrow, etc., at that stage?

I keep hearing about these "vital" slots @ LHR, you're the unlucky one I guess. Why are they vital?

therecklessone

Cork wrote:

Aer Lingus's prices in the pre Ryanair era were a rip off.

And this is relevant because?

Bill McH

therecklessone wrote:

I keep hearing about these "vital" slots @ LHR, you're the unlucky one I guess. Why are they vital?

Somebody else will probably explain it better, but as far as I know the reasoning is something like this.

LHR is the busiest airport in Europe, maybe even the world. There are flights between LHR and all corners of the globe. Dublin is an hour's flight away and there are between 12 and 14 Aer Lingus flights a day between Dublin and LHR. Anybody wishing to travel from any corner of the globe to Dublin can then do so by travelling to LHR and getting on a flight to Dublin. There is very likely to be a connecting flight at a suitable time and it only adds, say, two hours (all in all) to their journey. The same would apply in the opposite direction, Dublin to any corner of the globe.

It would also be possible to get from any corner of the globe to Dublin by going via other major European airports such as Frankfurt, Amsterdam or Paris. These airports may have direct flights to in or around the same number of worldwide destinations as LHR, I don't know. I don't think that Frankfurt, for example, would be too far off. But all three of them are around a two hour flight from Dublin and there wouldn't be as many flights to/from Dublin per day. Aer Lingus runs 5 per day to/from Amsterdam, 3 per day to/from Paris and just 2 per day to/from Frankfurt.

There's also 4 LHR-Cork flights a day and 4 LHR-Shannon flights a day run by Aer Lingus. Apart from 1 Paris-Cork flight per day, connections between Frankfurt, Amsterdam and Paris and Cork/Shannon are non-existent.

So LHR is a pretty attractive option for travel between Ireland and the rest of the World.

Quite apart from all of that, the UK is our largest trading partner and obviously we have a fairly close connection. LHR is only 15 or so minutes by train from London and so is a fairly handy airport to go to. Gatwick wouldn't be too bad, I suppose, though the last time I looked that airport was pretty chocca. There was talk of building a second runway but I don't know if they ever got around to it. But if you were relying on Luton or Stansted for rapid travel between London and Dublin/Cork/Shannon, well they're not really very attractive options.

therecklessone

Bill McH wrote:

So LHR is a pretty attractive option for travel between Ireland and the rest of the World.

Yet will become increasingly irrelevant when (if?) Aer Lingus get the opportunity to serve more transatlantic routes, or if they expand into SE Asia as has been predicted (Bangkok, Singapore, Hong Kong)

There are apparenty 22 cities in the US that wish to see direct flights from Ireland when the EU-US bilateral is concluded, why should Aer Lingus stick to delivering transatlantic passenengers to their competitors in London? Why not target that business themselves? Ditto with SE Asia/Australia/NZ busniness. Let the airline aggressively target those passengers, and indeed, let them target UK/European passengers wishing to travel to those destinations with Dublin as their transit point, lets take some of LHR's business from them!

Bill McH wrote:

Quite apart from all of that, the UK is our largest trading partner and obviously we have a fairly close connection. LHR is only 15 or so minutes by train from London and so is a fairly handy airport to go to.

Personally,if I was doing business in London, I'd fly to London City with Cityjet(Air France).

People seem to think that because the LHR slots are in demand, that they must be vital for the future of Aer Lingus and the furure of Irish aviation. IMO, nothing could be further from the truth.

Jackie laughlin

There is no plausible economic, business, political or practical reason for this sale. The motivation is so deeply ideological as to make it religious. The instigators are neo-liberal zealots immune to debate and reason.


By the way, prices in pre-Ryanair days were outrageous but no minister, convinced that lower prices would increase revenue and profits, did anything about it. Aer Lingus - if their management and board could not see the equation - could have been instructed to reduce prices. Instead the state supported Ryanair, ordering in the early days that Aer Lingus not compete; Aer Lingus was removed from Stansteadt by ministerial order.

Cork

Jackie laughlin wrote:

Aer Lingus was removed from Stansteadt by ministerial order.

Their ineffiecys and crazy prices did nothing for this country. Competition has forced Aer Lingus to reform. They will now sink or swim.

It is up to Aer Lingus staff and management to make a success of the airline. Government will no longer be a safety net.

If they succeed great - If they fail - they'll be taken over.

Jackie laughlin

Cork,
I already said that the prices were crazy. Everyone said so at the time. However, the state did not have to create competition as it did. A minister could have ordered a price reduction.

The virtues of markets and competition are greatly exaggerrated. Markets then have to be regulated by the state to prevent monopoly and other abuses. Without controls markets would collapse. However, ordinary people are duped into agreeing to the transfer of wealth to people already wealthy.

New_Departure06

Jackie laughlin wrote:

As a citizen I strenuously object to my airline being sold or given away. Yes, my objection extends to workers receiving shares which do not belong to them.

It's not a question of investment in schools, hospitals or aeroplanes. The problem is a childlike belief in markets and privatisation. Health is being privatised. Schools may follow. Prime Time last night covered the privatisation of local services via scams involving inefficient management companies.

Waste of public funds in recent years has happened by way of the employment of private companies who fail to deliver or fail to deliver on time. The state is eternally trying to intervene to make markets efficient.

Private enterprise and markets have a huge role in a mixed economy. However, we are relying far too much on simpletons who seem unable to get beyond, "Problem? Privatise!"

What is the problem with privatisation in principle? Irish Life is doing fine in the private-sector. Private-hospitals are needed to take pressure off a public-healthcare system which has manifestly failed. The profit-motive means that the private-sector builds hospitals far quicker. Ditching private-hospitals is the triumph of ideology over pragmatism and is nonsensical.

Waste of public-money is something the health-service would know all about. Their capital was tripled but has the service? Maybe the absence of a profit-motive is part of the problem rather than a desired state of affairs? The private-sector is less wasteful of cash than the public-sector precisely because they want to make a profit.

Jackie laughlin

There is nothing wrong with privatisation in principle. However, it is not a panacea. On the contrary, waste and failure often follow. Wasting public money has become very profitable. If you believe that the profit motive is always producitive, I suggest you try getting clean floors out of a contract cleaning company.

Bill McH

therecklessone wrote:

Yet will become increasingly irrelevant when (if?) Aer Lingus get the opportunity to serve more transatlantic routes, or if they expand into SE Asia as has been predicted (Bangkok, Singapore, Hong Kong)

There are apparenty 22 cities in the US that wish to see direct flights from Ireland when the EU-US bilateral is concluded, why should Aer Lingus stick to delivering transatlantic passenengers to their competitors in London? Why not target that business themselves? Ditto with SE Asia/Australia/NZ busniness. Let the airline aggressively target those passengers, and indeed, let them target UK/European passengers wishing to travel to those destinations with Dublin as their transit point, lets take some of LHR's business from them!

Well there are plenty of "ifs" in there. All of which could happen. I'd be surprised if Heathrow is going to become in any way "irrelevant" to transit to and from Ireland in the near future. If you have transatlantic flights coming in from Little Rock, Sioux Falls, Dallas, Phoenix or any other American city to a Dublin hub, a lot of those passengers will intend to go on to other cities in Europe/North Africa or wherever. You need to have regular flights going to those other cities. Let's say you have three passengers on each flight who wish to go to Tripoli or Algiers or Tunis on business. That's not going to fill a plane to those cities, so flights will probably not be available to those cities. On the other hand, each day there might well be, say, 300 Libyans who wish to fly from London, where they live, to Tripoli. There is therefore a reason to have a flight from LHR to Tripoli, and you can fill up the last few places with the punters from Sioux Falls. Or with the few punters from Ireland who wish to travel to Tripoli.

Whatever happens, whether Dublin becomes a hub or not and whether there are flights to Bangkok, Timbuktu or wherever, a question still remains. In 10-20 years time, when the Aer Lingus fleet needs to be replaced the next time, how is that to be funded?

silverharp

What is the Aer Lingus stance on Peak Oil??

The July issue of Airways, which is the journal of the international airline industry, carries a lead article entitled Peak Oil – The Collapse of Commercial Aviation. It is a long, perceptive and well informed article by Alex Kuhlman, suggesting that the industry must plan a profitable decline. The Middle East national airlines are identified as likely survivors, noting that Emirates Airlines have recently bought 43 Airbus 380s, a very large aircraft with a low fuel-burn per seat. Meanwhile airports are being expanded in many countries based on the false assumption that the past growth in traffic can continue.

therecklessone

Bill McH wrote:

Well there are plenty of "ifs" in there. All of which could happen. I'd be surprised if Heathrow is going to become in any way "irrelevant" to transit to and from Ireland in the near future. If you have transatlantic flights coming in from Little Rock, Sioux Falls, Dallas, Phoenix or any other American city to a Dublin hub, a lot of those passengers will intend to go on to other cities in Europe/North Africa or wherever. You need to have regular flights going to those other cities. Let's say you have three passengers on each flight who wish to go to Tripoli or Algiers or Tunis on business. That's not going to fill a plane to those cities, so flights will probably not be available to those cities. On the other hand, each day there might well be, say, 300 Libyans who wish to fly from London, where they live, to Tripoli. There is therefore a reason to have a flight from LHR to Tripoli, and you can fill up the last few places with the punters from Sioux Falls. Or with the few punters from Ireland who wish to travel to Tripoli.

Attracting transit passengers does not mean you have to get every single person who wants to travel to anywhere in the world into Dublin airport. The airline can and should target markets in Italy, Spain, Germany, France etc, places that they already serve. They should be able to attract transit passengers with aggressive marketing, competitive pricing, and the attraction of clearing US immigration in Dublin.

Why insist on protecting slots at LHR as a goal in itself when we can bypass LHR with direct flights to the US and SE Asia (I have no data to back this, but I believe the two busiest destination for Irish passenegers transiting LHR are North America and SE Asia/Australia). Why fly to LHR and transfer onto a flight to Hong Kong when you can fly direct to Hong Kong from Dublin?

I'll say it again, the value of the slots @ LHR is distorted in the public eye by the demand from other airlines for access to the airport. They are important now to Irish travellers, because there are too few long haul destinations served from Dublin by any carrier, that importance will diminsh with an expanded network of long haul destinations.

BuffyBot

In 10-20 years time, when the Aer Lingus fleet needs to be replaced the next time, how is that to be funded?

One would imagine they would do it in the same way as any other airline..reinvest a portion of profits, borrow, lease - a multitude of ways and means.

New_Departure06

BuffyBot wrote:

One would imagine they would do it in the same way as any other airline..reinvest a portion of profits, borrow, lease - a multitude of ways and means.

How feasible would that be in a context of state-ownership, especially considering that borrowing would effectively increase the national-debt? Would the govt really fork out the €1 billion needed to replace the fleet? Remember Aer Lingus profits are less than 10% of that.

BuffyBot

How feasible would that be in a context of state-ownership

That's what I'm saying - it probably wouldn't be. However, if they can expand and grow their operations outside of complete state ownership, well the options available to them are much more considerable.

Muggy Dev

The notion that any financial institution is going to invest hard cash in an airline in these hard times (fuel) that is effectively run by a union with the blessing of the government of the day.....is naive and stupid.

I heard the CEO, Mannion, the day of the stoppage last week on the radio praise SIPTU for allowing the inbound passengers to disembark.:eek:

So lets recap.....you have money to invest and they,Aer Lingus,want you to plug the hole in their worker's pension scheme and buy a couple of A330's.........and you get Mannion,Halpenny and Bertie.

Yeah right!

Trust me....this little piggy will not go to market.

ps:I see Ryanair have just placed yet another order for 10 B737-800's

Willie Walshe must be breakin' his hole!

Sleepy

Personally I feel that the best thing for this country would be for us to fold the company, give it's employees the legal minimum redundancy and no share of the proceeds of asset stripping Aer Lingus ourselves. The unions have the place crippled and completely unsuitable for investment (not even Michael O' Leary would enjoy taking them on) so let them pay the price for their greed.

With peak-oil hitting next year, I wouldn't invest in an airline in a fit so I'd wonder about the wisdom of any professional investor who would invest for any other purpose than to asset strip the company. Lets beat them to it.

Jackie laughlin

Sleepy,
Be serious. Aer Lingus is a profitable airline and part of our infrastructure. Asset stripping is not productive, creative business. Enterprise is what is needed.

The very idea that the likes of baggage handlers, cleaners and caterers ruined anything through an excess of greed is risible.

Sleepy

LOL Jackie, it's far from risable, the militancy of the airline's union has ensured that it will not survive the peak oil crisis. It is profitable now. In all probability it will not still be profitable in five years time as the greed of the unions cripples any attempt at enterprise in the organisation. You're right, asset stripping is neither productive nor creative but it could help ensure the best return for the Irish taxpayer on our investment in our national carrier. Though I'd love to see what Willie Walsh could do with the cream of the assets and a free hand to hire a new, non-unionised, workforce

There is no need for a nation that can't support a decent road network, rail network, telecoms infrastructure or justice system to have a national airline. We've forced an airline who are arguably the most efficient organisation in the business to set up base off our shores in an effort to protect Aer Lingus from the private sector. Protectionism has been, in almost every example from history, economic lunacy and I think the way the Irish government have treated Ryanair is a classic example of this.

Now, I'm sure we're going to hear the inevitable whining about service levels that always crop up when the big bad Ryanair are mentioned. Facts are Facts though, they've out-performed Aer Lingus on any route they've challenged them for. They're one of Europe's top airlines in terms of passengers carried and profitability. Sure ,they don't wipe your backside for you during your flight, but it's clear from the numbers flying with them that low-cost, no-frills service is what the majority want. We do still live in a democracy right? If the majority want Ryanair, why are we hanging onto Aer Lingus?

Jackie laughlin

The peak oil crisis - if it happens - will affect all airlines.

The unions were broken in Aer Lingus years ago.

Ryanair at a crucial moment in its development enjoyed state protection from Aer Lingus competition.

Ryanair sells a lower quality service for a marginally lower cost. It's not a very good deal but it's well marketed.

Aer Lingus is profitable!

Sleepy

Jackie laughlin wrote:

The peak oil crisis - if it happens - will affect all airlines.

Why do you think it wouldn't happen? It's pretty much a mathematical certainty. Yes, it will affect all airlines and many won't survive, particularly minnows like Aer Lingus that were it still a state body couldn't be baled out by our government nor could it raise money from the stock-market to weather the storm / invest in a new more fuel-efficient fleet.

The unions were broken in Aer Lingus years ago.

How can a union that held stoppages last week and that have just successfully held up the country for a €250 million package be described as broken? :eek:

Ryanair at a crucial moment in its development enjoyed state protection from Aer Lingus competition.

Maybe so, they've never had to have been bailed out by the government though have they? They've also faced far more hinderance from the Irish government than help, in fact it was Margert Thatcher rather than the Irish government of the day that provided approval for Ryanair's first intra-EU service.

Ryanair sells a lower quality service for a marginally lower cost. It's not a very good deal but it's well marketed.

To be honest, I think Ryanair offer a very good deal when compared with Aer Lingus and for all their 'no frills' attitude, their staff always seem to be more polite and friendlier than the drones on Aer Lingus flights. And lets be honest, it's only recently that the price differences could even be considered to be called marginal (a fact I'd disagree with by and large) and Aer Lingus would not have moved to the 'low-cost' model if it weren't for the fact that Ryanair were beating them out of the market.

Aer Lingus is profitable!

As I dealt with in my last post, Aer Lingus is profitable *for now*. When one considers union conditions/work ethic within the Airline, the impending oil shortages, the existance of a lean competitor who are constantly eating into their market, the need to upgrade the airline's fleet etc. etc. etc. hanging onto the airline at this point can only result in the next government presiding over the liquidation of the company.

Privatising the company seems to be only viable if the government hand over almost a quarter of the total valuation of the company to the unions. Which, I have to say is not acceptable to anyone that's not either buying or selling electoral votes. So, what else can we do? My suggestion is to run the airline as is, with a pay freeze in place and continue operating until the company is no longer profitable at which point the Irish government should appoint an asset stripping specialist and get the maximum return that can be obtained for the Irish taxpayer.

The workforce have killed the airline. They deserve nothing but contempt imho.

LINK: http://www.sbpost.ie/post/pages/p/story.aspx-qqqt=NEWS%20FEATURES-qqqs=news-qqqid=15593-qqqx=1.asp

Jackie laughlin

For most of my life I've been hearing about fuel crises that never in the end amount to very much. I've become sceptical. I recall a friend selling his petrol station in the 70s. One of his mantras was, "You'll never see 24 hour opening again."

(An aside: I'm not including the threat of global warming in the above. That indeed may be the ultimate threat to the air travel industry.)

The unions haven't been able to protect low paid workers for years. I wish people like redundant cleaners used sites such as this. It would introduce a dose of reality.

For electoral reasons the Govt. have been unwilling to make decisions on both Aer Lingus and Dublin airport. This is because, while they favour uncreative business orthodoxy, the transfer of money into private hands and the continued growth of a lazy, bloated "executive" elite, too many air industry workers are concentrated in a couple of constituencies.

As I said before, the Irish state hobbled Aer Lingus to save Ryanair. I think Michael O'Leary should say, "thank you."

Clearly my experience of Ryanair and Aer Lingus is different to yours. I used to travel weekly to Britain and used Ryanair because it was cheap. I was convinced that they sent their staff to a school of rudeness, where natural courtesy and helpfulness was beaten out of them! I endured my weekly ritual in humiliation until a friend pointed out to me that for a few quid more - a very few quid more - I could travel with Aer Lingus or BA where the staff behaved normally. It was nothing special: just, friendly helpful behaviour. These days the price difference is no more and I can avoid Ryanair to most of my destinations. I've no idea what the culture of rudeness is about. Being nice costs nothing. Perhaps it filters down in imitation of their CEO?

Sleepy

Jackie laughlin wrote:

For most of my life I've been hearing about fuel crises that never in the end amount to very much. I've become sceptical. I recall a friend selling his petrol station in the 70s. One of his mantras was, "You'll never see 24 hour opening again."

(An aside: I'm not including the threat of global warming in the above. That indeed may be the ultimate threat to the air travel industry.)

2007 marks the point at which we will hit peak oil. A link to give you some food for thought: http://www.lifeaftertheoilcrash.net/

The unions haven't been able to protect low paid workers for years. I wish people like redundant cleaners used sites such as this. It would introduce a dose of reality.

A dose of reality? Where's the reality in keeping on staff that are unnecessary? If you're made redundant it's because your job no longer exists. Would you rather that companies were banned from downsizing when it was necessary for their survival? Again, let me cite the fact that there was industrial action against Aer Lingus only last week and the fact that the unions have helped the workers of Aer Lingus broker a deak where they get to steal a little under a quarter of the company from you, me and every other Irish citizen should privatisation go ahead. A union's job is to protect it's employees from unfair work practices/unsafe work practices. What's unfair about a company letting staff go because they're no longer needed?

For electoral reasons the Govt. have been unwilling to make decisions on both Aer Lingus and Dublin airport. This is because, while they favour uncreative business orthodoxy, the transfer of money into private hands and the continued growth of a lazy, bloated "executive" elite, too many air industry workers are concentrated in a couple of constituencies.

On this we're agreed. The plan I've outlined would undoubtedly see Fianna Fail's strong position in North Dublin collapse. That's the problem with democracies, governments don't always get to be sensible. However, if we had decent politicians, all parties would be able to back such a proposal as it is in the country's best interest.

As I said before, the Irish state hobbled Aer Lingus to save Ryanair. I think Michael O'Leary should say, "thank you."

Sorry, but that's bull****. Read the wikipedia article I quoted earlier:

"In 1986 the company added a second route – flying Dublin-London Luton in competition to the BA/Aer Lingus duopoly for the first time. Under partial EU Deregulation, airlines needed only one government to approve an intra-EU service. Ireland refused in order to protect Aer Lingus but Britain, under Margaret Thatcher approved the service."

From the very start of the airline Ryanair has had to face Government protectionism regarding Aer Lingus. For the love of the Flying Spaghetti Monster, the Irish government forced Ryanair to create their European hub in a different country!

Clearly my experience of Ryanair and Aer Lingus is different to yours. I used to travel weekly to Britain and used Ryanair because it was cheap. I was convinced that they sent their staff to a school of rudeness, where natural courtesy and helpfulness was beaten out of them! I endured my weekly ritual in humiliation until a friend pointed out to me that for a few quid more - a very few quid more - I could travel with Aer Lingus or BA where the staff behaved normally. It was nothing special: just, friendly helpful behaviour. These days the price difference is no more and I can avoid Ryanair to most of my destinations. I've no idea what the culture of rudeness is about. Being nice costs nothing. Perhaps it filters down in imitation of their CEO?

Well, given that Ryanair are carrying far more passengers than Aer Lingus, it would appear that the majority agree with me

oscarBravo

Sleepy wrote:

2007 marks the point at which we will hit peak oil. A link to give you some food for thought: http://www.lifeaftertheoilcrash.net/

...or, more accurately, 2007 marks one of the points at which various different people or organisations believe we will hit peak oil.

Jackie laughlin

Sleepy,
Thank you for the link.

Do you really believe that redundancies happen because jobs have ceased to exist? Granted that happens in a tiny number of cases. Most redundancy "packages" corrupt workers into leaving quietly so that their replacements can be paid less. In many cases only minimum wage legislation prevents slavery. (Remember the unfortunate hairdresser supplied by a contractor to Irish Shipping.) A variation on redundancy is management pseudo theory which argues for "downsizing" by "outsourcing". This too leads to low wages. However, it also suits the lazy, unambitious manager who can contract out rather than manage and then spend more time playing golf. (Oopps! Sorry! I mean "networking".) Ambitious people tend not to like outsourcing.

I agree with you that my airline should not be given to the staff. However, again this is corruption. The corruptors are buying the staff's agreement to allow more private ownership. This is hardly an exercise in Union power.

I don't dispute your point about Thatcher's support for Ryanair. It is not inconsistent with my point that the Irish state was highly supportive at the startup and later prevented Aer Lingus competing on Ryanair routes to London.

I don't suppose it bothers Ryanair that they lost my custom but they needn't have. They had me convinced that they were far cheaper. It was only when I moaned to a friend about staff who were systematically rude, that he told me that the price differential was minimal. It is now zero.

Sleepy

Ambitious people tend not to like outsourcing.

I'd highly dispute this point. IMHO, ambitious people like outsourcing because they're the ones setting up companies to do the outsourcing.

I don't dispute your point about Thatcher's support for Ryanair. It is not inconsistent with my point that the Irish state was highly supportive at the startup and later prevented Aer Lingus competing on Ryanair routes to London.

The very fact that Ryanair had to go to London for support would demonstrate that the Irish state was far from supportive.

From your posts I'm gathering that you see any kind of privatisation as a bad thing and would rather the state controlled all businesses and that these were all unionised. Am I right in this thinking? Because if this is your preferred means of running a state, we're not going to come to any agreement on this.

Within the capitalist framework we live in, selling Aer Lingus whilst it's still a viable concern is probably the best option for the Irish people. Obviously, this statement refers to an actual sale of the company rather than a corrupt giveaway of large parts of it in a blatant attempt to curry favour with a few key constituencies...

I don't suppose it bothers Ryanair that they lost my custom but they needn't have. They had me convinced that they were far cheaper. It was only when I moaned to a friend about staff who were systematically rude, that he told me that the price differential was minimal. It is now zero.

To be honest, I don't believe that the price difference is zero. From my experience Ryanair sell far more cheap seats on each flight than Aer Lingus and when averaged out, their fares are cheaper. Economies of scale, smart management practices and a lean organisational structure mean they operate on a much lower cost base and can do this on a much larger scale than Aer Lingus.

Would you agree that were Aer Lingus to be privatised it would be highly unlikely for their corporate culture to change to the extent that you would no longer consider them a better option than Ryanair?

Jackie laughlin

I don't quite get your closing question. Corporate culture can be difficult to change. However, in a recent RTE documentary one of the owners of the US airline on which Ryanair was modelled offered the view that Ryanair's "excesses" were not necessary to profitability and probably were counter productive. She closed by saying something to the effect that while she liked and admired "Michael", there was no point in talking to him.

Good Lord, NO! I don't oppose privatisation any more than I oppose state involvement in business. Like almost all modern socialists, I REALLY DO believe in the mixed economy. I have problems with a belief in privatisation as the unquestioned response to everything. I'm beginning too to realise that we are creating a huge class (not in the Marxist sense of the word) of overpaid CEOs and other "management" drones.

Looking at the initiative of the creators of companies who supply outsourced labour is one approach. However, entrepreneurs are not all the same. Some are lazy feckers who want to make a quick buck and disappear off to the holiday villa. Some are ambitious to achieve, to make a name for themselves, to create something lasting, "to do the state some service".