Ryanair to buy Aer Lingus!

okidoki987

Ryanair have bought 16% of Aer Lingus and have offered 2.80 :eek:
per share to buy the rest of the company.
MOL you're some man
Waiting to see the next Ryanair add.

stepbar

What a **** you to the government I dont think it will happen, the competition authority will block it

dunkamania

i dont think this is a good move for Ryanair,it will make them less competitive as a firm

okidoki987

Shares now 2.81 Euro.
MOL is up 11% on the 16% stake he has already built up :eek:

stepbar

O leary knows that the gov / competition authority will block the bid. As I said the bid is a **** you to the government, I dont think he is really serious

Victor

okidoki987 wrote:

Shares now 2.81 Euro. MOL is up 11% on the 16% stake he has already built up :eek:

He can't turn that into profit though, there are rules about manipulating markets like that.

rondjon

stepbar wrote:

O leary knows that the gov / competition authority will block the bid.

O'Leary seemed quite confident this morning on the radio that a) the Competition Authority here in Ireland won't even be able to make a ruling on this and b) that the European competition authority (whatever that is) will approve the takeover based on precedents other European countries.

okidoki987

He can't turn that into profit though, there are rules about manipulating markets like that

True but if someone else enters the frame.......

i71jskz5xu42pb

okidoki987 wrote:

MOL is up 11% on the 16% stake he has already built up :eek:

He didn't actually buy 16%. He had the rights on 16% if the offer was accepted. Big difference.

The government have just said they are not selling so that's that. Time to put everything back in it's box.

ShiverinEskimo

PascalNee wrote:

The government have just said they are not selling so that's that. Time to put everything back in it's box.

Link?

I watched the dail on TG4 this morning and all the government decided was that it needed to be investigate further in association with the competition authority. As far as I'm concerned no decision has been made in regards to not selling to MOL/Ryanair.

i71jskz5xu42pb

ShiverinEskimo wrote:

As far as I'm concerned no decision has been made in regards to not selling to MOL/Ryanair.

As far as the government is concerned a decision has been made

A quick google search will get you the link.
http://news.google.ie/news?hl=en&q=ryanair%20government&btnG=Search&sa=N&tab=wn

ShiverinEskimo

Fair enough - I stand corrected - All I heard from bertie was investigate/look into etc.

rondjon

PaschalNee wrote:

He didn't actually buy 16%. He had the rights on 16% if the offer was accepted. Big difference.

Please explain?


With regards to decisions etc on the offer, the Aer Lingus Board have declined the offer, which really means nothing. They can only recommend to the shareholders not to accept the offer.

However, if Joe Public wants to sell their shares to Ryanair, there's nothing that the board nor the Government can do about that.

The only comment I've seen from the Government is that they're reviewing the offer, but that they foresee some competition issues. Which is all fair enough.

i71jskz5xu42pb

rondjon wrote:

Please explain?

I may be wrong on this but I read somewhere today that Ryanair only had agreed rights on the shares at a certain price. If the deal is does not go though they do not have to actually buy the shares.

Which makes sense - they would have bought ~200 million worth of shares. If the government do not want to sell, these shares may be worth a lot less than 200. Seems like a pretty big risk.

The Ryanair statement talks about acquiring shares - maybe they have bought them, maybe they have acquired the rights. As I said, I may be wrong on this.

rondjon wrote:

The only comment I've seen from the Government is that they're reviewing the offer, but that they foresee some competition issues. Which is all fair enough.

Post above has a link to a Cowen and Cullen (Laurel and Hardy) conference where they say the Government is not selling. Of course they might also be wrong ....

Cute Hoor

Ryanair had bought 16% of AL by this morning, now thought to be closer to 20%. These were bought from Ryanair’s own reserves of €2bn. The Govt can do sweet FA if shareholders sell to MOL, they can hold onto their share (25% I think) for all the influence they will have, and the ESOT can hold onto their 15% but it will not stop MOL getting control (50.1%) of AL which is what he wants.

This would appear to make great sense for Ryanair as they are in essentially different markets, Ryanair shorthaul, with a significant part of AL’s business being long-haul. Shannon & Dublin are the only 2 european airports that have a US immigration centre, this saves US travellers up to 3 hours not having to go through immigration control in the US. Ryanair could fly US bound passengers from all over Europe to Dublin/Shannon hubs to be processed through immigration and flown on by Aer Lingus to their US destinations.

phantom_lord

Unions and opposition parties in Ireland fear a takeover will wipe out competition, drive up prices and lead to job cuts

typical union bs, a ryanair take over would drive up prices?

Blackjack

I believe that Aer Lingus needs to maintain a minimum 51% Irish Ownership in order to retain it's US Landing rights. If Ryanair were to buy, then unless some sort of Holding company were created (not sure if this would even work) then I doubt that %age would be maintained.

Also, Ryanair and Aer Lingus currently only compete on 17 routes - however you need to bear in mind that Ryanair to Glasgow =Prestwick and Aer Lingus to Glasgow = Glasgow Airport, so the competition to the same regions is greater than 17. All of the routes competing would be to and from Ireland, so having competing airlines on these routes is to the consumers benefit.

A combined company would have a number of strengths, specifically in relation to purchasing power, greater economies of scale etc. However, I can't help feeling that AerLingus would be treated in the same manner as Buzz airlines was and be only a bolt-on for landing rights and nothing more.

Personally, as someone who regularly uses both airlines, Ryanair have the edge when it comes to punctuality etc, however Aer Lingus Transatlantic is cheaper than any Airline I've come accross, and their Lounge access and occasional upgrade is a Luxury I would sorely miss.

You have to admire O'Leary's opportunism though - the guy really never misses a trick. If he achieves nothing else from this then he'll have created a huge amount of publicity for himself and the company, it may turn out to be cheaper for him to have paid the corporate financiers than the Marketing teams to get Ryanair's name back in the media.

PhoenixRising

Blackjack wrote:

I believe that Aer Lingus needs to maintain a minimum 51% Irish Ownership in order to retain it's US Landing rights. If Ryanair were to buy, then unless some sort of Holding company were created (not sure if this would even work) then I doubt that %age would be maintained.

Would Ryanair Holdings not satisfy the Irish ownership requirement?

rondjon

PhoenixRising wrote:

Would Ryanair Holdings not satisfy the Irish ownership requirement?

While Ryanair might be Irish based and registered, it is not wholly Irish owned. It is 100% floated on the stock exchange, with no limits on who can own it.

Large chunks of it would be owned in the US via the ADRs which are traded over there.

Looking here, 36% of the company owned by it's top 4 investors is US based.

PDelux

Just wondering if anyone here made any money from this? Its a really good return in a few weeks... kinda like a quick SSIA, put in €10k, get back ~€13k.:)
i didnt buy any shares myself.

phantom_lord

PDelux wrote:

Just wondering if anyone here made any money from this? Its a really good return in a few weeks... kinda like a quick SSIA, put in €10k, get back ~€13k.:)
i didnt buy any shares myself.

I think the opportinity for doing that has passed.

Darragh29

I can't imagine the pilots in Aer Lingus bending over when Michael O' Leary tells them they can no longer charge their mobiles at work, etc. I've some respect for the man (MOL), but his attitude towards Ryanair staff is nothing less than a disgrace and it wouldn't be tolerated in Aer Lingus. The only reason why he gets away with bullying Ryanair staff, leaving aside his obvious business achievements at Ryanair for a minute, is because they don't have a union infrastructure in place, if you try to stand up to Ryanair mangagement if you are being screwed, your colleagues cannot stand up to support you as would happen collectively in Aer Lingus, as any person who openly supported you in Ryanair would be targetted for termination.

The set up with Aer lingus being unionised and O' Leary's well know contempt and hatred of unions or any type of collective voice in the workplace, is a recipe for total failure. It is like the infinite force meets the immovable object. O' Leary probably wants the Aer Lingus pilots to go on strike and then send in Ryanair planes & pilots to provide capacity on new routes...

Idbatterim

Aer Lingus employs 3,475 people, has 8m passengers and a €72m profit. Ryanair has only 3,063 employees, but flies 39m passengers every year and makes a €375m profit. Those figures speak for themselves. "In the event that Mr O'Leary's plans are successful, which looks increasingly likely, he will present his radical job reduction plans on a take-it-or-leave-it basis to the Aer Lingus trade unions. "

f Ryanair had a controlling stake in Aer Lingus it would give it alot of options, as was stated in todays indo, oleary only wants to implement willie walshs original plans for the airline. his take it or leave it offer is great, everyone else here pansies to alot of the unions every need. ahern included, who runs the country? i am so sick of hearing about them, how can they be so inward looking? MOL is what they need in government to get things done and tell alot of the bloodsuckers, self interest groups etc where to f**k off!

Blackjack

it seems some of Ryanair's own investors aren't entirely enamoured with the takeover plan either.

Cork

No - I did not buy shares.

Since Eircom - I have not dabbled in the things.

On the Ryanair move - Aer Lingus was itself largely a monopoly.

It changed people large amounts of money for flights. It was not until Ryanair came along that this changed.

Ryanair has delivered vaue to the Irish public.

While I have concerns about competition - I see merit in the move.

Aer Lingus is a small national carrier - In the airline business - economies of scale would be a big benefit in buying fuel and planes.

Aer Lingus is too small to "go it alone".

gemwol

Ryan Air taking over Aer Lingus would be the best thing to happen in the aviation industry in Ireland and hopefully it happens sooner rather than later.

Shannon in particular would be a big beneficiary. Ireland would become part of a central hub for feeding traffic on to the Aer Lingus Trans Atlantic routes. Ryan Air would be feeding passengers from local airports throughout Europe onto the transatlantic flights with one to two stopovers, a lot of those stop over would be Dublin and Shannon. Passengers love this, obscure airports across Europe giving direct access to the US market in a one ticket/one price based system. The same works in reverse, USA passengers would have access to most parts of Europe again in the same manner. Trans Atlantic passengers through Ireland would exponentiate.

What does this mean for Aer Lingus? It would in most likelihood transform them into the biggest transatlantic carrier in the world. More routes would expand, prices for passengers would drop. Shannon will be the biggest beneficiary, Dublin too, Shannon is working under capacity and plenty of room for expansion. Cork & Knock and the regionals would also benefit, capacity at these airports could absorb new routes from Europe. Ireland would become a huge transport hub between the US & Europe.

RTE, IMPACT, Mannion and the government are scaremongering the public, personal grudges in most cases, it's a disgrace. While they all feel that they will impact the outcome of the proposed takeover they won't. Investment bankers determine the outcome in these cases.

It is not a time for the government to be patriotic in the falsehood that they are doing it to protect the "national interest". They sold something far more important without putting any safeguards in place to protect customers, the backbone infrastructure to the telecommunication industry in Ireland, which if they had put the protections in place, would have prevented 40,000 telephone and broadband customers being switched of without any notice by Eircom during the week.

The Ryan Air / Aer Lingus takeover has to go and will go ahead, it makes perfect sense, its right for the country/jobs, for both airlines and would put Ireland right in the centre of the aviation Industry between USA & Europe. The economic benefit to Ireland is too huge to miss out on. Get behind Ryan Air.

But of course their are alternatives, the Babcok & Brown's off the world or Aeroflop, the sorts that would please RTE, IMPACT, Mannion and the government. The anyone, but O Leary camp.

Blackjack

gemwol wrote:

Ryan Air taking over Aer Lingus would be the best thing to happen in the aviation industry in Ireland and hopefully it happens sooner rather than later.

Shannon in particular would be a big beneficiary. Ireland would become part of a central hub for feeding traffic on to the Aer Lingus Trans Atlantic routes. Ryan Air would be feeding passengers from local airports throughout Europe onto the transatlantic flights with one to two stopovers, a lot of those stop over would be Dublin and Shannon. Passengers love this, obscure airports across Europe giving direct access to the US market in a one ticket/one price based system. The same works in reverse, USA passengers would have access to most parts of Europe again in the same manner. Trans Atlantic passengers through Ireland would exponentiate.

What does this mean for Aer Lingus? It would in most likelihood transform them into the biggest transatlantic carrier in the world. More routes would expand, prices for passengers would drop. Shannon will be the biggest beneficiary, Dublin too, Shannon is working under capacity and plenty of room for expansion. Cork & Knock and the regionals would also benefit, capacity at these airports could absorb new routes from Europe. Ireland would become a huge transport hub between the US & Europe.

RTE, IMPACT, Mannion and the government are scaremongering the public, personal grudges in most cases, it's a disgrace. While they all feel that they will impact the outcome of the proposed takeover they won't. Investment bankers determine the outcome in these cases.

It is not a time for the government to be patriotic in the falsehood that they are doing it to protect the "national interest". They sold something far more important without putting any safeguards in place to protect customers, the backbone infrastructure to the telecommunication industry in Ireland, which if they had put the protections in place, would have prevented 40,000 telephone and broadband customers being switched of without any notice by Eircom during the week.

The Ryan Air / Aer Lingus takeover has to go and will go ahead, it makes perfect sense, its right for the country/jobs, for both airlines and would put Ireland right in the centre of the aviation Industry between USA & Europe. The economic benefit to Ireland is too huge to miss out on. Get behind Ryan Air.

But of course their are alternatives, the Babcok & Brown's off the world or Aeroflop, the sorts that would please RTE, IMPACT, Mannion and the government. The anyone, but O Leary camp.

According to an article in todays Indo (a rag, but anyway) what it would mean for Aer Lingus would be 1000 redundancies. Article can be found here (free registration required).

Cork

Blackjack wrote:

According to an article in todays Indo (a rag, but anyway) what it would mean for Aer Lingus would be 1000 redundancies.

I am sure - increased efficencys would be sought in aer lingus.

This is happening anyway in the industry.

Cute Hoor

Blackjack wrote:

Indo (a rag)

Correct!

Gemwol has got it spot on imho, in the event that the offer is successful (MOL gets 51%).

John Sharman (the offer undervalues Aer Lingus (40% up on last week's price)), and Dermot Mannion's (Aer Lingus are confident that their new found shareholders will stick with them because they like the AL offering (unlikely Dermot if they can turn over a quick 40%)) ramblings over the last couple of days are unbelievanle.

Sharman/Mannion may in fact be on dodgy ground, they may be legally obliged to act in the best interest of their shareholders and may yet be forced to recommend the offer (or an improved one) to the shareholders. If they refuse to recommend the offer, and the share price subsequently collapses, they will have acted against the best interest of the shareholders.

Blackjack

Cute Hoor wrote:

Correct!

Gemwol has got it spot on imho, in the event that the offer is successful (MOL gets 51%).

John Sharman (the offer undervalues Aer Lingus (40% up on last week's price)), and Dermot Mannion's (Aer Lingus are confident that their new found shareholders will stick with them because they like the AL offering (unlikely Dermot if they can turn over a quick 40%)) ramblings over the last couple of days are unbelievanle.

Sharman/Mannion may in fact be on dodgy ground, they may be legally obliged to act in the best interest of their shareholders and may yet be forced to recommend the offer (or an improved one) to the shareholders. If they refuse to recommend the offer, and the share price subsequently collapses, they will have acted against the best interest of the shareholders.

Well even as a shareholder I can't help feeling some compassion for the 1000 odd people that would be made redundant.

BuffyBot

Shannon in particular would be a big beneficiary.

As soon as airlines can get out of stopping there, they will. Aer Lingus transatlantic included

Having seen the benefits of competition, I'd be sad to say goodbye to it.

gemwol

BuffyBot wrote:

As soon as airlines can get out of stopping there, they will. Aer Lingus transatlantic included

I agree. When the open skies agreement comes into effect your are correct in that Aer Lingus will not want to stop in Shannon.

But if Ryan Air takes over Aer Lingus then Shannon and the mid west region will benefit enormously. Airports like Shannon don't grow on trees:) A lot of western European airports are working at near full capacity. Shannon is perfectly placed to be a central hub for the new joint company, it's on the western tip of Europe and will be hugely under capacity when the Open Skies comes in to effect. The mid east and Shannon airport needs the Ryan Air takeover to succeed. The jobs growth potential is enormous for the airport and associated business.

References are being made to MOL asset stripping the company, I find this hilarious. Forget what he has ever said, just judge the man on his business acumen, the Ryan Air business model and its history. MOL is after one thing only - growth. He will expand Aer Lingus substantially. We all stand to benefit. How far down he can drive transatlantic prices remains to be seen but I think he is the only future for Aer Lingus and Aer Lingus should be biting his hand off.

Cute Hoor

Blackjack wrote:

Well even as a shareholder I can't help feeling some compassion for the 1000 odd people that would be made redundant.

I too would have huge sympathy for these workers if they were to lose their jobs, but remember where you read that 1,000 people would be made redundant Blackjack, so you can take that with a pinch of salt.

I believe that, far from shrinking, Aer Lingus will expand significantly if the deal goes through.

okidoki987

Didn't AL make a bucketload of people redundant while it was under state ownership?

rondjon

Blackjack wrote:

According to an article in todays Indo (a rag, but anyway) what it would mean for Aer Lingus would be 1000 redundancies. Article can be found here (free registration required).

As opposed to the 2000 odd that the government owners have made redundant over the past few years?

Lump

I don't think they'll get done on the whole setting up a monopoly, at the moment, Aerlingus and Ryanair only fly on 17 identical roots, so as far as stopping the take over on those grounds I don't think it'll happen. MOL says he wants to run them as two seperate companies, which I think he will do, since over the years he has said that "Ryanair" will never fly transatlantic. I think that he'll keep aerlingus as a "Luxury" airline, but make it more profitable. I think it's win win. Also since they plan the buy out with money they've already got, it means that they're less likely to fail.

John

okidoki987

Shares hit a high of 3.08 today on "rumours" that Ryanair upped their offer bid to 3.05 Euro.
Finished 2.90.

Blackjack

I don't think making even more people redundant (many of the redundancies during previous periods were from voluntary redundancies) is ever good, specifically for the people being made redundant.

Lump

It's god for business if those people are just being paid to sit around doing nothing all day.

John

Victor

Lump wrote:

Aerlingus and Ryanair only fly on 17 identical roots

Its more than that.

In any case, its about markets, not routes.

ArphaRima

Aer Lingus will survive this ryanair bid intact. The pilots UNION have seen to that.

Just a few points. The 2000 odd people previously let go were all voluntary, and all involved massive cash incentives. The next 1000 will involve the absorption (sp?) of Aer Lingus european operations into Ryanair and the complete dismemberment of current management.

Aer Lingus is one of the most profitable airlines in the world. It doesnt hold a candle to Ryanair, because growth has been stifled through lack of investment for the last decade, but its future is full of opportunity and promise.

Current pay, conditions and career progression will go from industry best to industry worst in a short time. Respect is non-existent in the Ryanair corporate culture..

if Ryan Air takes over Aer Lingus then Shannon and the mid west region will benefit enormously

Where are you getting all this from? Passengers want to fly point to point. They do not want 1 or 2 stops to get to their destination. There is nothing in shannon except for an airport. We are not Singapore. We are not and will never be a major hub. Shannon was a necessity brought on by limited aircraft range in the early days of transatlantic aviation. Those days have passed. And quite why ryanair ownership would change that is beyond me.

http://www.ireland.com/newspaper/opinion/2006/1012/1160340239970.html

Something rotten in Ryanair




There has been an analogy made in some quarters that Ryanair's bid to take over Aer Lingus represents a battle between the old and the new Ireland, writes Mary Raftery

Aer Lingus is predictably cast as the "old" - backward, union-ridden, inefficient, monolithic. Ryanair is the people's champion, the breaker of monopolies, forward-looking, flexible, focused on profit and proud of it.

However, to those who are happy to identify with Ryanair as typifying the new Ireland, the comments of Mr Justice Thomas Smyth in the High Court during the summer might come as a sharp shock.

"There are occasions," he said, "of which this is regretfully I think the second in my career as a judge I have had to do so, to say things that I found extremely difficult but which could not be left unsaid."

Ryanair had gone to the High Court alleging that pilots were being bullied and intimidated by their pro-trade union colleagues. The case was taken against the trade unions Impact, IALPA and BALPA (the Irish and British airline pilots associations). The bullying pilots were hiding behind aliases on a chat website, Ryanair claimed, and the court should order their true identities be revealed.

Instead, in an unusually perfect example of being hoist by one's own petard, it was Ryanair itself which was found to be the bully.

The background is as follows: in 2004, Ryanair was in the process of switching its aircraft from Boeing 737-200s to the more up-to-date 737-800s, and pilots needed to be retrained on the newer planes.

Ryanair wrote to all its pilots on November 12th, 2004, informing them that the company would refund them the training costs (€15,000) only if certain conditions were met. One of these was that should "Ryanair be compelled to engage in collective bargaining with any pilot association or trade union within five years of commencement of your conversion training, then you will be liable to repay the full training costs".

The letter's next sentence is an example of the famous Ryanair cheekiness which we all, for some unfathomable reason, appear to find so endearing. The pilots were told that "naturally this does not and will not affect your right to freely join any trade union or association of your choice."

Mr Justice Smyth was scathing about this. Describing it as "a Hobson's choice", he said it was "both irrational and unjust" that a pilot "through no act or default on his part could suffer the loss of €15,000". He added: "In my judgment this is a most onerous condition and bears all the hallmarks of oppression."

Pilots were understandably aggrieved by this condition. Ryanair management tried to discover what they were saying to each other on their website. Apparently supplied with a password by someone described by Mr Justice Smyth variously as a traitor, informer, Iscariot or Iago, the company infiltrated the website, and then took its court action to discover the identities of pilots who signed themselves "cantfly-wontfly" and "ihateryanair".

The judge found that there was no evidence of any bullying or intimidation of pilots by their colleagues on the website. He found wholly against Ryanair, and ordered the company to pay the costs of the seven-day action, estimated to be about €1 million.

He specifically found that the evidence of two senior members of Ryanair staff was "baseless and false". He judged that the real purpose of the company in investigating the pilots' website "was to break whatever resolve there might have been amongst the captains to seek better terms." He further stated that the decision to involve the Garda Síochána was unwarranted and had "all the hallmarks of action in terrorem" (ie designed to terrify).

Mr Justice Smyth took two hours to deliver his 65-page judgment last July. His further characterisations of the actions of Ryanair include the following: "despotic indifference", "sneering disregard", "facade of concern", "unburdened by integrity".

Justice Smyth concluded that "without hesitation, I find as a fact that ... 'fairness' did not seem to come into the reckoning of the plaintiff [ Ryanair] in its dealings with the defendants on the issues raised in and by this case. In summary, in the words of Isabella in Measure for Measure Act II.2: 'Oh, it is excellent to have a giant's strength; but it is tyrannous to use it like a giant'."

It is important to remember that these are not the views of disgruntled Ryanair employees, or of passengers fed up by all the hidden charges on top of the airline's flight costs. It is, rather, an insight into the culture of Ryanair from an impeccably authoritative source, a judge of the land dispassionately and impartially considering the facts as laid before him.

It begs an important question. Do we really wish to equate the kind of values defined by Mr Justice Smyth with the "new" Ireland? Are we happy that a company which engages in activities so roundly condemned by the judge should stand for us as an emblem of what we wish and hope our society to become?

Victor

fluffer wrote:

Just a few points. The 2000 odd people previously let go were all voluntary, and all involved massive cash incentives. The next 1000 will involve the absorption (sp?) of Aer Lingus european operations into Ryanair and the complete dismemberment of current management.

Of note Aer Lingus now have ~3,000 staff. In 1990 they had something like 12,000 staff, although many of them were employed in Team Aer Lingus, Cara (computers, recruitment, Baghdad hospital, etc.) and London ground handling oeprations for third parties.

ArphaRima

Well i know of a national airline with the same number of aircraft as Aer Lingus. There are about 35,000 direct employees. Its hilarious. Its also insanely profitable despite rampant corruption.

Blackjack

Lump wrote:

It's god for business if those people are just being paid to sit around doing nothing all day.

John

And you know with certainty those people are being paid to just sit around doing nothing all day?.

Victor

Ooopps...

http://www.timesonline.co.uk/newspaper/0,,2765-2404539,00.html

Ryan — yes it is a monopoly
Richard Oakley

Airline chief in radio gaffe

TONY RYAN, the co-founder of Ryanair, has admitted for the first time that his company’s €1.48 billion bid for Aer Lingus will create a monopoly in Irish aviation. ...

... and uh-oh:

http://www.thepost.ie/post/pages/p/story.aspx-qqqt=NEWS-qqqs=news-qqqid=18130-qqqx=1.asp

Competition boss advised Statoil in 1990s
15 October 2006 By Ian Kehoe

The chairman of the Competition Authority, which cleared the sale of Statoil last week following a mix-up over dates, was previously retained by the company to help it to overcome major competition issues. ...

phantom_lord

He was asked about the possibility of what used to be a state monopoly being replaced by a Ryanair one.

“Sure we have always had monopolies,” he replied. “It took us 50 years to break a monopoly and we broke (it) because the fares were too high and it was unfair. This monopoly, if it happens, will be driving fares down.”

.

rondjon

I'd have to go along with Tony Ryan there. What's wrong with a monopoly if it's still providing cheaper air fares. In the offer made for AL, Michael O'Leary has provided a committment to drop average fares over the coming 4 years.

Here's some commentary about a book by Joseph Alois Schumpeter (1883-1950) called Capitalism, Socialism and Democracy (1942).

Schumpeter argued with the prevailing view that "perfect" competition was the way to maximize economic well-being. Under perfect competition all firms in an industry produced the same good, sold it for the same price, and had access to the same technology. Schumpeter saw this kind of competition as relatively unimportant. He wrote: "[What counts is] competition from the new commodity, the new technology, the new source of supply, the new type of organization... competition which... strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives."

Schumpeter argued on this basis that some degree of monopoly was preferable to perfect competition. Competition from innovations, he argued, was an "ever-present threat" that "disciplines before it attacks." He cited the Aluminum Company of America as an example of a monopoly that continuously innovated in order to retain its monopoly. By 1929, he noted, the price of its product, adjusted for inflation, had fallen to only 8.8 percent of its level in 1890, and its output had risen from 30 metric tons to 103,400.

As an extension of this, we should be mindful of the kinds of monopolies that we're used to in this country.

The monopolies that we're used to were all state-sponsored, propped up by the goverment, and supported by monopolising legislation. There was no requirement to innovate, or to compete on price, because there would never be any forthcoming competition from anyone else.

This is not going to be the case would Ryanair be successful in taking over Aer Lingus. It will not have any legislative support in it's monopoly.

ArphaRima

This is not going to be the case would Ryanair be successful in taking over Aer Lingus

Horse****e.

You quote socialist principles, which rely on absolute theoreticals. Ryanair does not have the will or the capacity to change Aer Lingus. It is a heavily unionised, yet highly professional workforce. Ryanair on the other hand relies on personal contracts. Never will you reconcile their differences for the staff. Those employees hold contracts, and it doesnt matter who the owner is, he cannot circumvent the law.

It should be pointed out that Ryanair and Aer Lingus both are amongst the cheaper more profitable airlines in the world. On that they are little apart.

If Ryanair wanted to "go transatlantic" it would be far easier just to purchase new long haul aircraft like the Boeing 787. It certainly doesnt want Aer Lingus' european operations, which is far more costly to operate than their own.

Personally I belive it to be a thinly veiled attempt to consolidate ryanair capacity at Dublin Airport, dissolve Aer Lingus' european fleet, and sell off our transatlantic services to another entity post Open-skies agreement for a ridiculous sum.

Others can continue to believe that an Irish monopoly and reduced competition will see MOL lower fares significantly out of the goodness of his heart.

rondjon

fluffer wrote:

Horse****e.

You quote socialist principles, which rely on absolute theoreticals.

Maybe if you read a bit more, you'd actually see that Schumpeter doesn't actually espouse socialist principles, and in fact, in the spirit of Michael O'Leary, clearly defends the need for entrepreneurship and it's place in a capitalist sociate.

fluffer wrote:

Ryanair does not have the will or the capacity to change Aer Lingus. It is a heavily unionised, yet highly professional workforce. Ryanair on the other hand relies on personal contracts. Never will you reconcile their differences for the staff. Those employees hold contracts, and it doesnt matter who the owner is, he cannot circumvent the law.

All very true, but it's extremely simple to circumvent the wills of the unionised employees. You offer them more money, better conditions, and better personal contracts - as well as enhanced wealth through either buying out their ESOT shares, or providing a measure of share ownership in the new Ryanair.

And please don't give me any or your so called "horse****e" over employee conditions in Ryanair. If conditions were really as bad as everyone says they are, do you think there'd be as many people working there as there is? People don't have to work for Ryanair - they chose to.

fluffer wrote:

If Ryanair wanted to "go transatlantic" it would be far easier just to purchase new long haul aircraft like the Boeing 787. It certainly doesnt want Aer Lingus' european operations, which is far more costly to operate than their own.

Why start from scratch when you can take something that's already in place, apply your own model to it, and simply make it better. It's the way of the world.

fluffer wrote:

Personally I belive it to be a thinly veiled attempt to consolidate ryanair capacity at Dublin Airport, dissolve Aer Lingus' european fleet, and sell off our transatlantic services to another entity post Open-skies agreement for a ridiculous sum.

Again, I disagree. Surely it would be much cheaper to make a planning application and to go ahead and construct a new terminal at Dublin airport (negotiating all the difficulties implied there) rather than going and spending €1.4bn on buying an airline and shutting it down.

MOL is a business man with responsibilities to his shareholders. Buying an airline the size (and success) of Aer Lingus only to shut it down in order to gain a edge at a minor peripheral European airport is not something that his shareholders would allow.

ArphaRima

but it's extremely simple to circumvent the wills of the unionised employees. You offer them more money, better conditions, and better personal contracts - as well as enhanced wealth through either buying out their ESOT shares

As we argue, it is public knowledge that Aer Lingus employees are snapping up shares (probably at a serious loss)to frustrate or block such a takeover. Doesnt that tell you something?
MOL will not be offering them more money. Ryanair pilots just submitted a pay claim for parity with Aer Lingus pilots. Its the same for cabin crew, engineers, and office staff. Conditions? Are you kidding?! Would you work for Ryanair?

If conditions were really as bad as everyone says they are, do you think there'd be as many people working there as there is

I know for a fact that many of those working in Ryanair are not Irish nationals. They are enticed to work in Ireland by the salary. No pensions are offered. Working conditions are appalling. They use it as a stepping stone to get onto Middle Eastern airlines, or other european carriers. Ask any of them if they see it as a career job.

Personal contracts are not a replacement for collective bargaining and unionisation. I think it speaks volumes to see that Ryanair staff have been trying to unionise the last few years.

Read the article i posted above. It will give you the opinion our legal system affords Ryanair management.

Buying an airline the size (and success) of Aer Lingus only to shut it down in order to gain a edge at a minor peripheral European airport is not something that his shareholders would allow

They would if it was done at massive profit to themselves.

People don't have to work for Ryanair - they chose to

Do you believe that the current Aer Lingus staff would choose to?