Mick O'Leary; master or muppet?

El Stuntman

master says I!!

O'Leary holds all the aces
OPPONENTS of Michael O'Leary were all a bit dazed last week. As a result they were all behaving oddly. But none was odder than the managers of the Irish Airline Pilots' pension fund.

No one can be blamed for piling into Aer Lingus shares at last week's peak. Everyone makes mistakes over price. But a few pilots may suffer sleepless nights from the idea that their savings are now weapons in a turf war between Ryanair and the Government. €30m of the poor pilots' nest-egg found its way into Aer Lingus shares in two days.

Their life savings are out there prowling in the jungle with all the hedge funds. If the bid flops, the trustees will have to justify the investment bet as being in the interests of the pension scheme and its members.

That could be interesting, especially as the shares closed down at €2.92 on Friday. NCB stock brokers, rare independents in the takeover battle, reckoned they could be worth €3.72 to O'Leary.

So what is grounding them?

Well, Ryanair holds all the aces.

Last week the real story took a breather. So it was time for the fairytales. The result was a brake on the Aer Lingus share price. The market was nervous.

Although all brokers predict a second Ryanair offer, well above the current €2.80 level, Ryanair sources are hinting at the nuclear option: what if the volatile Michael gets fed up and storms off the stage? What if he throws a wobbler, takes the hump and sells his 19.2 per cent share stake? The price could tumble all the way back below €2.20 as the pilots and hedge funds - who gambled millions punting above the €3 mark - are left marooned up there while their saviour saunters away with a heap of cash.

He is unlikely to do this, but it is a potent threat. O'Leary is unpredictable. His other options include ultimate success (over 50 per cent), a meaningful minority stake blocking any other predator, or an accommodation with the unions and the Aer Lingus board.

O'Leary's capacity to scatter his enemies was evident from their insane reactions last week.

The employees trust (ESOT) was in a state of chaos, sending out signals that it wishes to replace Aer Lingus chairman John Sharman. There was even a fairytale being spun that the ESOT might borrow to buy more stock. A possible road to bankruptcy. Not a prospect that would make O'Leary weep.

The unions were back in cloud-cuckoo land, circulating TDs, imploring them to pressurise poor Martin Cullen, the flotation's laughing stock, to buy more shares at any price. A doomed mission.

Another fanciful flier suggested that the Aer Lingus pension fund itself could be raided and the proceeds used to thwart O'Leary. Pensioners should take to the streets (and the courts) if the trustees decide to gamble their savings in an ideological war.

Hedge funds were supposed to be gathering shares rapidly, hoping to offer Ryanair a huge block of shares which O'Leary will need to buy.

It was the week of rumour, as the Ryanair ringmaster sat back, surveying the headless chickens, pondering his options.

Meanwhile the Aer Lingus board was paralysed, waiting for their tormentor's next move.

It may have been a week where rumour filled the vacuum but one hideous reality remained: happiest of all the players are the advisers. Thirty million richer. The Government has advised the advisers who advised them into this mess to advise them out of it. More rewards for the incompetent.

And last week it emerged that it was the €30m men who overcame the brave resistance of the Dept of Finance to their lunatic valuation of Aer Lingus shares at only €2.20.

Perhaps the Government should, instead, have listened to NCB who are claiming Aer Lingus is worth €3.72 a share?