Will Aer Lingus Survive

Winty

With a loss of €240 million in just 2 years can Aer Lingus survive much longer, how are they still flying.

Can anyone explain how with such big loss they can still trade?

http://www.irishtimes.com/newspaper/breaking/2010/0330/breaking10.html

Sorry if this is not the correct forum.

woodseb

this is from their release today

Gross cash of €828.5m (31 December 2008: €1,206.8m); debt of €492.6m (31 December 2008: €552.9m)

their strong cash position allows them to continue to trade for a short time at a loss - obviously this is not sustainable in the long term as you can see the cash pile is dwindling

seamus

They occupy a few routes that are quite important to the Irish taxpayer. I can't see the really see Government allowing the airline to fall. What I mean is that there is coverage (by the likes of Ryanair) to most countries, but the airports that they fly to make a big difference.

Ryanair don't fly to Brussels, for example. They fly to Charleroi, which is nowhere near Brussels. If Aer Lingus fail, then another company might buy the Brussels slot and the Dublin slots separately and suddenly there's no direct link from Dublin to Brussels, which might have a knock-on effect in generating FDI.

The same would be true of a lot of AL's routes to Europe.

murphaph

seamus wrote: »

They occupy a few routes that are quite important to the Irish taxpayer. I can't see the really see Government allowing the airline to fall. What I mean is that there is coverage (by the likes of Ryanair) to most countries, but the airports that they fly to make a big difference.

Ryanair don't fly to Brussels, for example. They fly to Charleroi, which is nowhere near Brussels. If Aer Lingus fail, then another company might buy the Brussels slot and the Dublin slots separately and suddenly there's no direct link from Dublin to Brussels, which might have a knock-on effect in generating FDI.

The same would be true of a lot of AL's routes to Europe.

Can't see it happening myself. If there's a demand somebody will fill it. I'd prefer Aer Lingus to modernise and become profitable as I believe a Ryanair monopoly would be a disaster.

As regards FDI...well we pulled in a sh!tload of FDI in the early 90's with relatively crappy transport connections to the rest of the world, so I'm not convinced it would have a devastating effect. If we are competitive, FDI will stay in and come to Ireland.

LK_Dave

seamus wrote: »

They occupy a few routes that are quite important to the Irish taxpayer. I can't see the really see Government allowing the airline to fall. What I mean is that there is coverage (by the likes of Ryanair) to most countries, but the airports that they fly to make a big difference.

Ryanair don't fly to Brussels, for example. They fly to Charleroi, which is nowhere near Brussels. If Aer Lingus fail, then another company might buy the Brussels slot and the Dublin slots separately and suddenly there's no direct link from Dublin to Brussels, which might have a knock-on effect in generating FDI.

The same would be true of a lot of AL's routes to Europe.

We have seen this before at Shannon. The Government said back then it was powerless to interfere with Aer Lingus business decisions. Why or how could they then interfere with any Dublin issues??

seamus

LK_Dave wrote: »

We have seen this before at Shannon. The Government said back then it was powerless to interfere with Aer Lingus business decisions. Why or how could they then interfere with any Dublin issues??

They're barred from interfering with business decisions, but there's little to stop them renationalising the airline and taking control of it.

I'm sure MOL would have an appeal or two to make to the EU though.

COYW

LK_Dave wrote: »

We have seen this before at Shannon. The Government said back then it was powerless to interfere with Aer Lingus business decisions. Why or how could they then interfere with any Dublin issues??

They can't is the answer. I love flying with them and fly to the states with them 90% of the time when I go. However, the planes are empty for the majority of flights. They must be losing money hand over fist on those flights and I fly to JFK with them.

I can see the likes of Ryanair buying them up. I just hope that the same standard of service remains or I will switch to Delta.

Also, the fares for domestic and european flights have gone back up to the pre-Walsh days. I am trying to find flights to Hamburg and Budapest and they are all €200+ with them.

Fat_Fingers

seamus wrote: »

They occupy a few routes that are quite important to the Irish taxpayer. I can't see the really see Government allowing the airline to fall. What I mean is that there is coverage (by the likes of Ryanair) to most countries, but the airports that they fly to make a big difference.

Ryanair don't fly to Brussels, for example. They fly to Charleroi, which is nowhere near Brussels. If Aer Lingus fail, then another company might buy the Brussels slot and the Dublin slots separately and suddenly there's no direct link from Dublin to Brussels, which might have a knock-on effect in generating FDI.

The same would be true of a lot of AL's routes to Europe.

Agree, if they go bust someone else will come in and take their place. I dont think Ryanair would get their slots.

Brussels is irrelevant to most of the traveling public. That route is mainly reserve of our friends politicians.

Sleepy

Facts are: Michael O Leary isn't an idiot - if he buys the company it'll involve Ryanair style union management (i.e. to hell with them) and he'll focus on maintaining the service levels under the Aer Lingus brand for the trans atlantic flights (probably on an upgraded fleet).

Why wouldn't any airline keep the Brussels route? It's got the most price insensitive consumers in the world: Irish politicians who don't give a damn if they're spending €500 of taxpayers money on a flight one should expect to cost a fifth of that. Like I said, O' Leary's no fool, he'll keep the route when he buys the skeleton of Aer Lingus.

bladeruner

Sleepy wrote: »

and he'll focus on maintaining the service levels under the Aer Lingus brand for the trans atlantic flights (probably on an upgraded fleet).

how do you upgrade the Aer Lingus fleet ?
They have modern airbus 330s for long haul .

oppenheimer1

seamus wrote: »

They occupy a few routes that are quite important to the Irish taxpayer. I can't see the really see Government allowing the airline to fall. What I mean is that there is coverage (by the likes of Ryanair) to most countries, but the airports that they fly to make a big difference.

Ryanair don't fly to Brussels, for example. They fly to Charleroi, which is nowhere near Brussels. If Aer Lingus fail, then another company might buy the Brussels slot and the Dublin slots separately and suddenly there's no direct link from Dublin to Brussels, which might have a knock-on effect in generating FDI.

The same would be true of a lot of AL's routes to Europe.

There are certain routes which the government recognises as important, ones that are needed but demand isn't sufficient to sustain them. They are called public service obligation routes and are subsidised. Any airline can operate them, Ryanair does some, aerlingus and others do the rest.

I don't want to see Aerlingus fail as it would reduce choice particularly regarding flights to the UK. No start up would be able to take on the might of Ryanair as they often bully rivals out of the marketplace, using their cash reserves to offer essentially free flights until their rival runs out of capital. Fares skyrocket in the aftermath without competition.