Gov to sell remaining shares in AL?

Tabnabs

Leo Varadkar was on Newstalk this morning (around 8.45) and revealed that the government looked set to sell of their remaining 20% stake in the airline.

The interview should be available on the Newstalk website fairly soon for confirmation.

christy c

It's up now:

http://media.newstalk.ie/podcast/26066/popup

It'll be interesting to see who buys it seen as FR are ruled out due to the EU ruling. Hard to see another airline wanting it with FR being a nuisance shareholder. (He starts talking about it almost 6 minutes in)

David086

If there's an airline to buy it I'm going with IAG.

mayotom

David086 wrote: »

If there's an airline to buy it I'm going with IAG.

or Air France-KLM

Delta Kilo

We were discussing this in work (I work in aviation) and we reached the conclusion that nobody would buy it.

First of all its only 25%, second of all Ryanair still own 30% and lastly many of the staff own a lit of shares in the remaining 45%. It is way too messy for an external airline to get tangled in, perhaps if aer lingus was just about to float and the government were never involved it would be different but as it stands its just no viable. I wouldnt like to be trying to force a change through in that board meeting!

I think many of the bigger european airlines that would consider buying a stake in the likes of aer lingus will have their eyes firmly set on the Portuguese Government's sale of TAP which is a great opportunity to buy into a great airline and MRO, so Aer Lingus might slip in under the radar!

who what when

How much would they be likely to get by selling their 25% share?

LOccitane

[FONT=Verdana,Helvetica,Arial][SIZE=-1][FONT=ARIAL,]This certainly seems to have got the attention of the media today!

Leo Varadkar should proceed with more subtle caution rather than broad-brush statements that make for good News headlines, enhance his image as being proactive but are in fact economically neutral or negative.

From where I se it - Aer Lingus is at risk of being targeted by investors seeking to generate maximum immediate returns with a pure focus on it's core asset values. What will the government really generate from the sale? Something south of EUR 100 million at current fair values. Any investor will only realise exceptional returns even over a three-five year period - through the disposition or diversion of some of EI's core assets. Net earnings growth won't be sufficient to provide anything like such a similar return.

LH has performed exceptionally well financially in the past 18 months, in tandem with the general German economy. It has generated a significant amount of free cash flow and a 25% investment in EI or in fact an acquisition of the combined FR/Government holdings at rates even above current market values would be a readily affordable investment for LH. All else being equal - either LH or BA (IAG) are the leading potential airline specific investors.

I think that ultimately, we won't see action on this anytime soon. A slight hint of hot air IMHO. We have what appears to be strong pressure for the government to proceed with a sale that will net a gross amount of EUR 83 million at today's rates, or EUR 72 million or lower on the basis of the latest 30 day average share price.

Any majority equity acquisition by a leading European/Global airline group such as IAG may also lead to long run rationalisation of the airline - which should be a key consideration in all of this.[/FONT][/SIZE][/FONT]

David086

To be honest I don't see Lufthansa buying shares in other airlines for quite some time. They're in the process of selling off Bmi while Austrian Airlines is in debt, so I think they've enough on their plate.

LOccitane

David086 wrote: »

To be honest I don't see Lufthansa buying shares in other airlines for quite some time. They're in the process of selling off Bmi while Austrian Airlines is in debt, so I think they've enough on their plate.

I agree, but they would be the potential front-runner in terms of purely an airline specific investor were there to be one. That's only IMO of course.

LOccitane

Tenger

who what when wrote: »

How much would they be likely to get by selling their 25% share?

Less than E100 million....

...based on the current share price.


However like MYOB below I believe the share price of EI doesn't accurately reflect its true value. The recent results show 3/4 of a billion euro in cash reserves, a very young fleet of which 40% is owned, early delivery slots for the A350 and of course the 3rd largest slot grouping into LHR.

Can anyone remember the last FR takeover bid? They offered the govt E750M when EI had more than that in cash reserves!!!!!

L1011

Tenger wrote: »

Less than E100 million.

The market cap of the floated 57% is about 350M so the govt's 28% is worth about 175M at the moment (edit: RTE just said 83M so its possible that 100% is floated and the state and employee trust hold floated shares, wasn't aware that was the case)

However Aer Lingus's actual asset value is far higher than what its shareholding would suggest. Owned aircraft, cash at bank and Heathrow slots alone are worth serious cash, orders may be worth something. Their cash reserves alone are probably higher than their floated market cap...

River Song

MYOB wrote: »

Heathrow slots alone are worth serious cash

Going on this (and reminiscing upon a conversation I had a few months ago with a fellow enthusiast), would there be any interest from airlines looking to advance their position in LHR, not limited to BA/IAG?

Tenger

Michael_E wrote: »

........would there be any interest from airlines looking to advance their position in LHR, not limited to BA/IAG?

Well I doubt any other airline can really put pressure on BA at LHR, they own 43% of the slots. Bmi are next with than 8%, then EI with their 4.5% share. (In 4th place is VS with 3.5%)Source Anna.aero.com

IMO the only alternative in terms of the LHR slots would be Star Alliance in the guise of Lufthansa, they may want to increase their toehold in LHR to take some of the market share from BA/AA. This could be complemented by EI feeding pax to Asia/Pacific region via LH hubs (FRA/MUC) rather than thru LHR.

CapnHex

Why not Emirates or Etihad? Either could be interested in the extra LHR slots, and/or use Aer Lingus for onwards US traffic out of DUB with pre-clearance.

roundymac

How safe are those LHR slots going to be if EI is sold off?

Delta Kilo

Its not being sold off.

Its only 25%, you are still a smaller stakeholder than Ryanair. Whatever company buys it will need board approval, a board made up of shareholders from Ryanair and the others, to make any decisions. Chances are things will remain very much the same.

BuffyBot

Why not Emirates or Etihad? Either could be interested in the extra LHR slots, and/or use Aer Lingus for onwards US traffic out of DUB with pre-clearance.

They wouldn't be allowed to take majority ownership under the current rules.