Ryanair to buy Aer Lingus!

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?

rondjon

fluffer wrote:

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?

It is public knowledge that the pilots are buying up shares in the company. I don't believe that "employees" in general are.

I don't believe either that it is public knowledge what the intention of the pilots is with regards to what they're going to do with their shareholding. If you know different, please illuminate us all.

What I do know is that using a pension fund (as the pilots are doing) to purchase shares in a company can only be done, legally, so that it will benefit the pensioners associated with that pension fund. Therefore, should the pilots have a choice of selling their shares to Ryanair at €3.72 (estimated fair value of AL), or holding on to the shares after a failed takeover at €2.20 or less, then the pilots would be obliged through pensions legislation to take the money and run.

fluffer wrote:

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?!

If you reread my comments, I did give a number of options of how MOL may compensate AL workers (and not just on pay and conditions). Currently at an offer price of €2.80, each member of the ESOT is standing (I understand) on a profit of €60,000. At a possible offer price of €3.72, that profit would rise to €80,000.

With a lumpsum like that, plus redundancy, ESOT members wouldn't have to work for either AL or Ryanair. They can take the money and run. Very simple. Money talks. MOL wouldn't have to worry about AL staff joining Ryanair once they take that juicy pay off.

fluffer wrote:

I know for a fact that many of those working in Aer Lingus 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.

Are you speaking of Ryanair or AL here? Otherwise, you're shooting yourself in the foot because this seems to imply that it's as crap working in AL is you say it is in Ryanair.

Get back to me when you can formulate your argument correctly?

fluffer wrote:

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

I've given an example of why they may chose not to above. If they chose not to, then that's their perogative. No one is "entitled" to their jobs, and AL staff definitely are not in possession of a god-given right to work for AL.

Given that as a public company now, it's quite likely that further rounds of cost cutting are going to be brought into action to keep the shareholders happy, AL staff have to investigate their options. They may very well be out of a job in the next 12 months anyway.

fluffer wrote:

Would you work for Ryanair?

Nope. Because I can't fly a plane, and I spill stuff when I try to pour myself a coffee. But what's your point? If I was a trolley-dolly or a pilot and had no job currently, and Ryanair were looking for staff, I'm not going to turn down a job.

And if you claim that there are people out there who would, then you'd want to cop yourself on and join us here in the real world.

ArphaRima

No time for further response right now. Aer Lingus should read Ryanair. Duly edited.

rondjon

fluffer wrote:

No time for further response right now.

what_car

rondjon wrote:

If you reread my comments, I did give a number of options of how MOL may compensate AL workers (and not just on pay and conditions). Currently at an offer price of €2.80, each member of the ESOT is standing (I understand) on a profit of €60,000. At a possible offer price of €3.72, that profit would rise to €80,000.

absolute horse**it* this 60k figure is absolute rubbish. its no where near that much. its actually less than half of that.

its nice to check the facts out, before repeating what you have heard in the media or from others.

also what about tax..? ........:D

rondjon

what_car wrote:

absolute horse**it* this 60k figure is absolute rubbish. its no where near that much. its actually less than half of that.

its nice to check the facts out, before repeating what you have heard in the media or from others.

also what about tax..? ........:D

Sheesh!!! I did say, I "understand" that it's €60,000. Can you give us the information as to how it is less than half that amount?

From what I understand, the €60,000 is money the employees would get via the ESOT, before tax - this would be separate to individual share holdings that employees also hold.

I also understand that the delay in Ryanair releasing their official bid is to do with their investigations surrounding realising this full €60,000 for the ESOT members, thereby avoiding any tax bill at all - sort of like what happened in Eircom.

But as I said, this is my understanding, coming from comments via the media.

If you can enlighten us otherwise, than please do so. And "because!!!" or "cause I said so" doesn't count.

Idbatterim

Ha ha rather amusing, aer lingus worrying about competition etc! for anyone who wants to inform themsleves a bit more about aer lingus and what they did to stimy competition read the MOL, ryanair book! its actually to good to be true, ahern and the clowns werent going for the right decision regarding aer lingus in terms of benefit to the country, passengers or airline, they were as usual doing their litle lapdance trying to keep their votes in north dublin and please the old dinosaurs in the trade unions. i like flying with aer lingus, their fares are quite good and its a good service all around, but i really hope MOL gets holds of aer lingus and rubs their faces in it! Why the hell should anyone be guaranteed a cushy job for life anymore?!

PhoenixRising

Idbatterim wrote:

Ha ha rather amusing, aer lingus worrying about competition etc! for anyone who wants to inform themsleves a bit more about aer lingus and what they did to stimy competition read the MOL, ryanair book! its actually to good to be true, ahern and the clowns werent going for the right decision regarding aer lingus in terms of benefit to the country, passengers or airline, they were as usual doing their litle lapdance trying to keep their votes in north dublin and please the old dinosaurs in the trade unions. i like flying with aer lingus, their fares are quite good and its a good service all around, but i really hope MOL gets holds of aer lingus and rubs their faces in it! Why the hell should anyone be guaranteed a cushy job for life anymore?!

Ah yes - another turkey voting for Christmas. You decry the Aer Lingus monopoly pre-Ryanair while calling for a new monopoly.

Ruu_Old

Some more news on the Aer Lingus issue below, from RTE.ie.

Denis O'Brien has bought almost 2% of Aer Lingus for €32m.

In a statement to RTE News, he said he had purchased the shares in Aer Lingus because he believes in competition. He added that he believes Aer Lingus, as a company, had a strong national and international reputation.

He said he has agreed to support the pilots and the staff and the board and management of the company.

Meanwhile, Aer Lingus pilots have increased their stake in the airline slightly to 2.24% after spending €870,00 on buying more shares yesterday.

In a statement to the stock exchange, the pilots said they had bought 300,000 shares at €2.90 per share.

Meanwhile, the Pensions Board has contacted trustees in the Aer Lingus pilots' pension fund and raised concerns about its buying shares.

The concern is that the pilots' strategy of buying shares to block Ryanair's bid could reduce the Aer Lingus share price. That could result in a loss on the investment for the pension fund and its pensioners.

The trustees of the pilots' fund have been told they have a duty to act in the best financial interest of members.

Aer Lingus shares were unchanged at €2.88 in Dublin this evening.

Sarsfield

Remember the Ryanair ad for their new Malta route (featuring the bowld Dennis)

To paraphrase the RTE TV report, it's not wise to take the piss out of a rich guy

http://dynamic.rte.ie/av/2183118.smil

Riviera

so aer-lingus are saying that there will be job cuts...

so the dilemma for the esot is:
accept offer, get €60k, keep your job (if you work outside of marketing and catering) and probably earn more of a salary.

or

no €60 windfall (although probably half that in the future sometime), job cuts in the same divisions and probably same salary.

I don't work for or know anybody who works for either company. I'm just trying to see the motivation for the esot members.

Why are AL employees so hell-bent on not working under MOL??