Aer Lingus 53 cent To buy or not to buy

Lexus1976

Aer Lingus reported half year earnings this morning. The Irish airline has reported an operating loss of
€93m for the period, compared with a loss of €23.4m for the same period in 2008. This was below market
expectations. The total number of passengers increased 1.7% to 4.943m over the period. Net cash fell to
€439.6m over the period down from €653.9m at the end of 2008. Trading continues to be very challenging,
with very limited visibility into the coming months. New CEO Christoph Mueller joins the company on the
1st of September. Although the results today are disappointing, they are hardly surprising given the difficult
environment. The key focus for Aer Lingus going forward should be aggressively cutting back on costs,
and a return to profitability.

Why not think I'll take the risk

glanman

I think your only hope of making money is if Ryanair buy them, they seem to be in serious bother having used €300million(open to correction) of cash reserves, out of €800million, to keep the loses down...

Lexus1976

My speciality is investing in recovery companies and unpopular shares. Sometimes it works sometimes it does'nt. The gains far outweigh the losses. Touch wood.

glanman

I think it is worth the punt too but it will go one way or the other. They could go bust or double/treble in value and be bought. They cant keep going the way they are, the cash will run out very quickly. I would say you will have your answer in 18 months/2 years...

The government still have 25% ya? Will they step in to save them in the future????

ixus

A sinking (air)ship.

Maybe read come comments on thepropertypin that will sum things up:

daveirl

Non Irish institutional investment in AL is minimal at this stage, i.e. nobody cares.

TUG

I.E. The shares are illiquid.

The Government has 25%, Ryanair has a shade under 30%, the staff and pilots have a large tranche, these are not traded shares.

Punt away!

Lexus1976

ixus wrote: »

A sinking (air)ship.

Maybe read come comments on thepropertypin that will sum things up:

daveirl

TUG

Punt away!

NCB have now recommended this as a buy:

http://www.rte.ie/business/2009/morningrep/download/0827ncb.pdf

Just put a limit of 50 cent on them.

air

This is my take on this:
The only hope for Aer Lingus is if their unions finally see the writing on the wall and allow he company to be managed as a private company in a cut throat commoditised industry.
While the new CEO looks to have good credentials (I've only done a quick google on him) he doesn't have any history of making breakthrough changes in strongly unionised businesses.

If Aer Lingus were to adopt the Ryanair business model there could certainly be a future for them and it's not rocket science either. Unfortunately it will never happen in an environment where you have to get union approval every time you want to change the brand of napkins or anything else.

If the unions were true to their members they would see this and allow the management to run the company as a sustainable business - improving their chances of retaining their jobs. However unions have a conflict of interest because in this situation they cease to have a reason to exist, their reps loose power and the parent union is out of pocket.
IMHO Irish employment law provides plenty of protection for the worker today, unions are a total hindrance to our competitiveness in the global marketplace. /rant

Raskolnikov

On paper, Aer Lingus looks like a fantastic buy. It still has loads of cash, Heathrow landing slots, a relatively new airfleet. When you look under the hood though, there's a lot to scare away investors.

The first thing that really concerns me is pensions. Even at this day, Aer Lingus are still running a defined benefit pension scheme. Not only that, but union have managed to wrangle a concession that these pensions are index-linked to current salaries. As we've seen from our own public sector, these scheme are very costly and will cost the airlines hundreds of millions in the coming year as they are forced to plug the pension deficit. There is also a host of other issues that Michael O'Leary brought up to the board (http://www.ise.ie/app/announcementDetails.asp?ID=2054311).

I haven't decided if Aer Lingus management are just that incompetent, or whether they're crooked. Either way, they're making decisions that are not in the best interests of shareholders.

glanman

It was said this morning that they are going to cut the perks that are in Aer Lingus. For Example: (open to correction but I think I am right) Family members of a pilot with the company from the 70s, 80s era, are allowed fly for free 1st class, or upgrade for free to first class, unlimited and for life. There are numerous perks like this that are edemic in Irish society from public sector (teachers getting a retirment bonus of €200,000 plus) and private (6 figure retirement bonuses in Dairygold)

Unions in Ireland are a joke. Surely the union should be trying to protect and maximise the value of its members shares???

damnyanks

If Aerlingus go bust (Which is a good probability) Ryanair will step in and will 100% not pay a premium.

As far as I'm concerned its junk.

finisklin

glanman wrote: »

For Example: (open to correction but I think I am right) Family members of a pilot with the company from the 70s, 80s era, are allowed fly for free 1st class, or upgrade for free to first class, unlimited and for life. There are numerous perks like this that are edemic in Irish society from public sector (teachers getting a retirment bonus of €200,000 plus) and private (6 figure retirement bonuses in Dairygold)

Are these urban myths or can they substantiated?

If true I am scared.....also how come I didn't go into the public sector? MMMmmmmhhhhh:mad:

patbrady877

According to a someone being interviewed on the Matt Cooper show, the largest shareholding director has a total of 15k in shares. They know more than most of us, and they are not buying them - so why should we.........

JTMan

damnyanks wrote: »

If Aerlingus go bust (Which is a good probability) Ryanair will step in and will 100% not pay a premium.

As far as I'm concerned its junk.

+1

The cash burn is shocking, they are down from 1 billion to under 300 million EUR by year end.

I think it is 95% likely there will be an Aer Lingus examinership by 2011.

Lexus1976

Obvious target for a take over bid. Am I the only one that can see a lot of potential in buying these shares?

Put it this way, people were buying AIB and BOI when they were 20cents. In my opinion Aer Lingus has a lot more going for them at the moment then Bank Shares. Time will tell, and I've got a hunch it wont be Ryanair taking them over. Do your own research.

Another thing why is so much emphasis being put on Bank of Ireland at the moment, should it not be AIB? Considering the Canadian interest, I know the Canadian bank is only thinking about investing in AIB due to the fact that they are planning on increasing their market share in the American market, but there's still a lot of potential there when looking at their holdings compared to BOI.

The above is only my opinion.

ixus

There will come a time when Aer Lingus is attractive as a take over, but I think it's a year off. (off the top of my head)

It's a cyclical business, as has been mentioned, and has yet to hit the bottom of the cycle. That's when it becomes attractive IMHO. The company has to become so weak that the unions and government have limited power.

Raskolnikov

Lexus1976 wrote: »

Another thing why is so much emphasis being put on Bank of Ireland at the moment, should it not be AIB? Considering the Canadian interest, I know the Canadian bank is only thinking about investing in AIB due to the fact that they are planning on increasing their market share in the American market, but there's still a lot of potential there when looking at their holdings compared to BOI.

Canadian interest in AIB has been pretty much debunked.

http://www.irisheconomy.ie/index.php/2009/08/14/canadian-enthusiasm-for-nama-mountie-move-rules-out-nationalisation/

No foreign bank will be remotely interested in our banks until they've been cleaned out.

Lexus1976

Raskolnikov wrote: »

Canadian interest in AIB has been pretty much debunked.

http://www.irisheconomy.ie/index.php/2009/08/14/canadian-enthusiasm-for-nama-mountie-move-rules-out-nationalisation/

No foreign bank will be remotely interested in our banks until they've been cleaned out.

For the moment.

daveirl

This post has been deleted.

royaler83

Read on the indo today tha that aer lingus chairman Colm barrington bought 30k euro of shares, surely he sees a future or a rise in the SP?!

Interested to hear peoples opinions on this

http://www.independent.ie/business/irish/aer-lingus-chairman-spends-836430000-on-shares-in-airline-1874292.html

DublinWriter

It's going to be Sabena II - run, don't walk.

Gas, consideirng Bertie's rhetoric of people trying to 'steal' the airline when Willie Walsh tabled a management buy-out.

ranger4

Anyone been buying?

royaler83

ranger4 wrote: »

Anyone been buying?

Nope still thinking it over.

Apologies if this has been asked already but what exactly would happen to a shareholders holdings if, for example, ryanair took them over?!

bosra

Isn't always the case though..remember Eugene Sheehy buying his AIB shares in Aug 07 ( i think) @ 16ish..I think he put at least a million in at the time.. Seems those at the top are as blind as anyone else-

royaler83 wrote: »

Read on the indo today tha that aer lingus chairman Colm barrington bought 30k euro of shares, surely he sees a future or a rise in the SP?!

Interested to hear peoples opinions on this

http://www.independent.ie/business/irish/aer-lingus-chairman-spends-836430000-on-shares-in-airline-1874292.html

royaler83

bosra wrote: »

Isn't always the case though..remember Eugene Sheehy buying his AIB shares in Aug 07 ( i think) @ 16ish..I think he put at least a million in at the time.. Seems those at the top are as blind as anyone else-

Good point, but who exactly did recommend selling AIB at that time, very few saw it coming, everything was rosy.
Whereas now its a case of sink or swim for aer lingus and their chairman looks to be confident of a recovery of some sort. They surely know the position their in and what their chances of survival are?!

rugbyman

I feel that with the new man taking over, with the various leaks over the last few weeks about the financial affairs of Aer Lingus, that change will come about.

The workers ,staff they probably call themselves, must soon see the writing on the wall, do a deal with the company to leave,retire,cut wages for those left.

This may see a short term rally in the shares. I fancy, seat of my pants guess,no research ,that they could be 70 cents soon.

By the way, whatever was the outcome of those wallys, the Captains putting their pension money in at up on 3 euro a share. was there not some talk of that being reckless trading? any info?

Regards, Rugbyman

air

For sure, the number of news stories on the perks, salaries etc are most likely an orchestrated campaign by the upper management to remove any public support that the workforce might enjoy if they decided to take any industrial action.

The workers are now in a position where they would get likely very little support from a public that is suffering a deep recession while they enjoy apparently excessive salaries, terms and conditions etc.

I'd consider a short term punt at this stage but would be inclined to take profits of any significance out very quickly.

yobr

rugbyman wrote: »

I feel that with the new man taking over, with the various leaks over the last few weeks about the financial affairs of Aer Lingus, that change will come about.Regards, Rugbyman

Change will come but at what price, if the staff spend a couple of days on strike, as they have done in the past, then it could very negatively affect the SP.

air wrote: »

The workers are now in a position where they would get likely very little support from a public that is suffering a deep recession while they enjoy apparently excessive salaries, terms and conditions etc.

I'd consider a short term punt at this stage but would be inclined to take profits of any significance out very quickly.

Again while they have good conditions they have been protected from the real world by social partnership and this winter could certainly be one of discontent in EI. However if you do manage to make anything I would agree, take it out quickly.

finisklin

Has anyone been watching this stock over the last few days? It's gone from .52c to .61c today. The volumes have been pretty hefty too indicating that some heavy hitters have bought in.

I got a couple of hundred shares at .50 cents as a punt...is this rally gonna be short lived or has management got a cunning plan? Certainly the August traffic figures from were up 7.7% and the new CEO has started....the feel good factor could be coming back into this stock.

Can it sustain it? Will it be taken over? :cool:

Daragh101

finisklin wrote: »

Has anyone been watching this stock over the last few days? It's gone from .52c to .61c today. The volumes have been pretty hefty too indicating that some heavy hitters have bought in.

I got a couple of hundred shares at .50 cents as a punt...is this rally gonna be short lived or has management got a cunning plan? Certainly the August traffic figures from were up 7.7% and the new CEO has started....the feel good factor could be coming back into this stock.

Can it sustain it? Will it be taken over? :cool:

Did any of yee buy this stock..? 74cent today!

displaced dub

i bought 4000 at €0.59, so im a happy camper at the moment.

ranger4

Daragh101 wrote: »

Did any of yee buy this stock..? 74cent today!

Hoping for dip back to 0.68 and will buy.

Daragh101

ranger4 wrote: »

Hoping for dip back to 0.68 and will buy.

I was so close to buying them at 50cent.....I think i will take the punt if they hit 60cent.

displaced dub

Hi All

I have some info on Aer Lingus which is pretty much from the horses mouth.

A deal is in place between SIPTU Aer Lingus and the Government for the cabin crew staff, from what i understand its as follows.

Instead of letting the staff go they will be offered a 3 day week with the government covering the balance of their pay.

ranger4

displaced dub wrote: »

Hi All

I have some info on Aer Lingus which is pretty much from the horses mouth.

A deal is in place between SIPTU Aer Lingus and the Government for the cabin crew staff, from what i understand its as follows.

Instead of letting the staff go they will be offered a 3 day week with the government covering the balance of their pay.

I will be holding onto my aerlingus stake, unions are begining to wake up and smell the coffee, drastic cuts will be implemented to keep airliner alive, i predict this stock will be at least 1.30 by next year.

Daragh101

displaced dub wrote: »

Hi All

I have some info on Aer Lingus which is pretty much from the horses mouth.

A deal is in place between SIPTU Aer Lingus and the Government for the cabin crew staff, from what i understand its as follows.

Instead of letting the staff go they will be offered a 3 day week with the government covering the balance of their pay.

where did you hear that!

Daragh101

ranger4 wrote: »

I will be holding onto my aerlingus stake, unions are begining to wake up and smell the coffee, drastic cuts will be implemented to keep airliner alive, i predict this stock will be at least 1.30 by next year.

what did you buy in at...
whats your reasoning for thinking they will be at least €1.30

ranger4

Daragh101 wrote: »

what did you buy in at...
whats your reasoning for thinking they will be at least €1.30

I feel new management team will cut waist and hopefully follow as much as possible ryanairs opperating model, I am confident of upside with sp with bumps along the way as the irish economy shows signs of bottoming.

Daragh101

any predictions on michael o leary and aer lingus!?

ranger4

Daragh101 wrote: »

any predictions on michael o leary and aer lingus!?

Next ceo.:D

stevedublin

Micko's doing a great job sucking up to the European commission for the Lisbon campaign!

retenzo12

he was on today fm this morning and said it is unlikely that he will be making another bid for them but he could be just playing it up until after the treaty. . . The interview should be on the today fm podcast

ranger4

Aerlingus sp upgraded to buy with new target price up from 0.58 to 1.00euro goldman sachs.:D

Daragh101

would yee say:rolleyes: aer lingus is a pretty safe bet considering its current price €0.66..
thinking of investing !!!

ranger4

Daragh101 wrote: »

would yee say:rolleyes: aer lingus is a pretty safe bet considering its current price €0.66..
thinking of investing !!!

I will be holding untill i see 1.50e then i might sell a percentage, Will Likely see some form of dispute possibly end of year or early next year with new management cutbacks but feel sp will recover next year with global recovery.

heyjude

ranger4 wrote: »

but feel sp will recover next year with global recovery.

Maybe, but a global recovery will also probably see a rise in oil prices as demand picks up worldwide, which isn't good news if you're in the aviation business. Also most experts seem to think that any recovery in Ireland, will lag behind the global recovery, so oil prices may rise before they see the benefits of economic recovery.

Daragh101

good point...
i think i mite do some more research over the weekend and then make a decision!

Ranger 4, what makes you think they will hit such highs?

ranger4

heyjude wrote: »

Maybe, but a global recovery will also probably see a rise in oil prices as demand picks up worldwide, which isn't good news if you're in the aviation business. Also most experts seem to think that any recovery in Ireland, will lag behind the global recovery, so oil prices may rise before they see the benefits of economic recovery.

Very true but new management will get opportunity to hedge what price it pays for fuel.

rugbyman

It seems fairly reasonable to assume that if Ryanair,probably the strongest airline in Europe, valued AerLingus at 1.40 a while ago then it is still worth the best part of that amount. Needless to say ryanair,if it is not to become the owner, need the s.p. to rise far above that to regain its investment at 2.40.
i agree with the 1.00 target in the near term

Regards , Rugbyman

pocketdooz

1) Why would Ryanair be able to value the business more accurately than the overall market?

2) It was a different world and a different company when Ryanair tried the takover bid.

3) You are not Ryanair and therefore cannot realise the synergies available to Ryanair if they did take it over, therefore it should be of less value to the overall market than it is to Ryanair specifically.

4) By taking AL over, Ryanair would eliminate a big competitor - thus placing a premium on the company, from Ryanair's perspective.

.

rugbyman

Pocketdooz,
I made a comment on ryanair, had not intended it to be a watertight arguement.

some weeks ago i commented on the regular leaks,the new man coming, the belief that we must be reaching a situation where the rump of the workers must realise it is time too play ball and save the company, and the complete lack of public or Govt. sympathy for them. their union officials are paid to do a job and their comments are to be expected, but mean little.
there will be change.
i am a weekly flier , Ryanair is competing strongly against AL on price.

What amazes me ir how AE amassed the 800 million in the first place.

regards,Rugbyman

Daragh101

damnyanks wrote: »

If Aerlingus go bust (Which is a good probability) Ryanair will step in and will 100% not pay a premium.

As far as I'm concerned its junk.

if this happened, would shareholders not still benifit?