JetBlue In Talks To Buy 25% Stake In Aer Lingus

Turbine

Aer lingus' senior management team has held talks with US low cost carrier JetBlue Airways about it taking a stake in the Irish airline.

According to informed sources, JetBlue is the Aer Lingus management’s preferred trade investor at a time when the Government is planning to sell its 25 per cent holding in the airline.

Separately, Aer Lingus is believed to be in discussions with Middle East airline Etihad about a commercial partnership.

This is likely to comprise some form of code sharing or sales agreement, whereby the Irish carrier and Etihad would supply passengers to each other’s flights.

Speculation has mounted in aviation circles here that Aer Lingus might even operate flights to Abu Dhabi, Etihad’s domestic hub, to supplement the Middle East carrier’s 10 flights a week from Dublin.

It is understood to have held discussions recently with New Era, an arm of the National Treasury Management Agency charged with advising on State assets.

The talks are believed to be wider than just the Aer Lingus shareholding.

According to sources, they extend to how Etihad might help to develop passenger services at Dublin airport’s Terminal 2.

The talks are thought to include the use of so-called Fifth Freedom flying rights.

This would allow Etihad, for example, to fly from Abu Dhabi to Dublin, pick up passengers here and then continue on to the US. This is prohibited at present.

http://www.irishtimes.com/newspaper/frontpage/2012/0312/1224313154997.html

http://www.businesspost.ie/#!story/Home/News/Aer+Lingus+shares+up+as+JetBlue+seen+as+suitor/id/19410615-5218-4f5d-b0fe-b5f747383831

Interesting times ahead...

coylemj

Any external party in the airline business would be nuts to buy into EI while Micko is holding on to 29.9%, he can block anything the new partner proposes so they would effectively be handcuffed and unable to make any strategic changes to EI that didn't meet with his approval.

Micko bought into EI for for exactly the same reason why Tony O'Reilly bought 29% of the Sunday Tribune - as a strategic manoeuvre to block anyone else from using it as a stepping stone into the Irish market.

donvito99

I always felt that with Emirates' emphatic entry into the Irish market that Etihad would have to enter into some sort of arrangement like this with Aer Lingus.

So, maybe EI will go east (again) with their own metal, a la Madrid - Dulles?

Turbine

coylemj wrote: »

Micko bought into EI for for exactly the same reason why Tony O'Reilly bought 29% of the Sunday Tribune - as a strategic manoeuvre to block anyone else from using it as a stepping stone into the Irish market.

No he didn't, he bought shares in Aer Lingus with the intention of taking them over. Now that the European Commission has blocked their takeover of Aer Lingus, there is no strategic value in their 29% stake, hence why Ryanair have indicated they'd be willing to sell it.

roundymac

Turbine wrote: »

No he didn't, he bought shares in Aer Lingus with the intention of taking them over. Now that the European Commission has blocked their takeover of Aer Lingus, there is no strategic value in their 29% stake, hence why Ryanair have indicated they'd be willing to sell it.

There are two elephants in the room where the take over of EI is concerned. One is the pension deficit, the other is MOL/Ryanair. Ryanair is EI's biggest rivial, in Ireland, MOL is able to play games with them and the Government he has got so much spare cash. It's an ego thing with him. If Ryanair ever took over EI would be closed down/broken up within 12-18 months.

coylemj

Turbine wrote: »

No he didn't, he bought shares in Aer Lingus with the intention of taking them over.

Micko wanted to takeover an airline with wall to wall unions and a pensions black hole? I don't think so.

Turbine

roundymac wrote: »

There are two elephants in the room where the take over of EI is concerned. One is the pension deficit, the other is MOL/Ryanair. Ryanair is EI's biggest rivial, in Ireland, MOL is able to play games with them and the Government he has got so much spare cash. It's an ego thing with him. If Ryanair ever took over EI would be closed down/broken up within 12-18 months.

Whatever about O'Leary, the pension deficit will be resolved, more than likely with Aer Lingus making some sort of a contribution towards it, and the government approving a bond swap through NAMA.

coylemj wrote: »

Micko wanted to takeover an airline with wall to wall unions and a pensions black hole? I don't think so.

Well technically Aer Lingus don't have any obligation to pay into the pension scheme as it was part of a group pension scheme between them, the DAA, and SR Technics (who've now pulled out of Ireland altogether). As for the unions, what's to say he wouldn't have just stopped recognising them?

cson

roundymac wrote: »

If Ryanair ever took over EI would be closed down/broken up within 12-18 months.

Do you have MOLs ear or something? Because thats quite an outlandish statement to make.

Whether you like them or not, the former flag carrier has a huge amount of goodwill on its side. He'd be loathe to destroy I would think, trim the fat and deunionise as much as possible but to do away with EI would not make a huge amount of economic sense.

Tenger

bladeruner wrote: »

.......How would Ryanair integrate flying to real airports using narrow and wide body airbus aircraft into an all Boeing operation ?
They never had any intention of it.

I would argue that at the time of the first takeover bid Boeing were being told to get ready in case they needed to paint all those B737 green. MoL had announced that he would double the EI fleet within the year if he got his hands on EI.

If the first bid was successful FR could have ended the lease on the EI A320 fleet/sold off any owned frames and expanded their shorthaul operation using on order 'FR' B738's. Essentially using the EI brand to certain markets while keeping the FR brand flying elsewhere. Both shorthaul ops would feed into a LCC longhaul operation ex DUB.

At the time of the 1st bid EI has large cash reserves which would have covered any termination penalties on the A320's. As with Buzz when FR bought them out, the EI staff would be brought into work and given 2 choices, a new contract or out the door.

FR bought Buzz from KLM in 2003 for approx £20M. They took STN slots, 8 B732's. They rebranded as "Buzz STN" and some staff joined the new company which inherited all the 'old' Buzz assets,(including pension funds) 'old' Buzz was shut down.

BuffyBot

They never had any intention of it.

You're quite right - they never did. It was quite clearly stated at the time that Ryanair would keep EI as a separate entity operating as it did. There was no integration into FR planned..

Milan Cobian

You're quite right - they never did. It was quite clearly stated at the time that Ryanair would keep EI as a separate entity operating as it did. There was no integration into FR planned..

Even a cursory knowledge of o'leary and ryanair would tell you that the truth and ryanair are strange bedfellows (with apologies to Mr Justice Smyth).
His modus operandi would never have allowed EI to continue. Such naivety was a central plank is his plan and would have played well in Ireland. The EU were less gullible.

Turbine

bladeruner wrote: »

Roundymac got it in one,
around the time of the attempted take over MOL joked that he would create 1000 New jobs....but he would fire 3000 first.

How would Ryanair integrate flying to real airports using narrow and wide body airbus aircraft into an all Boeing operation ?
They never had any intention of it.

Didn't Michael O'Leary also make it clear he would've maintained Aer Lingus and Ryanair as 2 separate operations?

As for flying into 'real airports', Ryanair are already flying into several main airports such as Berlin, Budapest, Edinburgh, Madrid, Barlceona-El Prat, London-Gatwick, among others. Ryanair is getting to the stage where it will have grown as much as its going to grow, and their strategy is now less about load factor and more about yield. When you have to go back to the markets you need to offer them something, and Ryanair can no longer rely on offering double digit growth figures, and so instead must rely on profit. Flying into major airports is part of this shift in strategy.

So I wouldn't see that as barrier to them maintaining the Aer Lingus operation, especially when it now provides a significant feed into their long-haul network.

Turbine

Well that didn't last long:

RTÉ News - Business - JetBlue rules out interest in Aer Lingus stake

BuffyBot

Don't think it was ever a real consideration tbh