Guinness Peat Aviation

GCU Flexible Demeanour

This is as much a thread about my own ignorance, as anything else. I was doing some research on the aviation industry in Ireland. I'd heard of Guinness Peat Aviation, clearly, and I take it everyone knows about the Irish involvement in aircraft leasing. I'd hadn't realised before the extent to which this was really an Aer Lingus initiative. It makes it a slightly strange vehicle - as you'd essentially a State company setting up a subsidiary to avail of the State tax breaks intended to encourage private sector entrepreneurship.

Am I unusual in being this clueless about the origins of GPA? I mean, I vaguely knew it had to do with tax breaks, but not the AL involvement.

http://www.euromoneyplc.com/product.asp?PositionID=&ProductID=954&ArticleID=2050474

<...>GPA's creation was a lucky accident. In 1974 Aer Lingus had three 747s that it did not need, so Tony Ryan, then a manager at the airline, was asked to find a use for them. Ryan visited a few airlines and eventually signed a lease deal with Air Siam.

After finding strong demand for leases, Ryan decided to create one of the first operating leasing companies and persuaded Aer Lingus to join him. The Irish flag carrier had been investing outside of aviation and had recently bought finance house Guinness Peat so created Guinness Peat Aviation, or GPA, taking a 50% stake. <...>

The base for GPA's operations was Shannon, a little town that had come to prominence in the 1940s when the airport was built to refuel trans-Atlantic flights. To outsiders it may have been a unusual choice to locate. But GPA, which became the first finance company to set up in Shannon, realized the importance of the tax breaks on offer and most of GPA's employees were seconded from Aer Lingus and worked in an office on Shannon's main industrial estate. <...> The lessor's first employees all had airline experience, but as the company grew the company started hiring younger staff from law firms and universities. Many of these found the move to Shannon difficult."We used to say that Shannon was the equivalent of Saudi Arabia with drink," says one former employee. "Although it has improved significantly since then." <...>

phonypony

A good read if you haven't already read it is 'Crash Landing: An inside account of the fall of GPA' Christopher Brown!

asdfg!

You have no idea how varied the interests Aer Lingus had. There were hotels, maintenance companies, manufacturers. They ran airlines and helped set them up. They sent Engineers and pilots on secondment to all sort of airlines. Plus Aer Lingus managers ran airlines.

Working for Aer Lingus in the old days and you could find yourself sent abroad on anywhere from Africa to Asia.

Then there was CARA and PARC and of course leasing.

The Aer Lingus that exists nowdays is merely a shadow of the old Aer Lingus.

In 1991 when Saddam Hussein invaded Kuwait, there were Aer Lingus people there and one in particular distinguished himself in getting people out.

Younger people have no idea how significant Aer Lingus was at one stage. It was in effect an arm of the Irish government and in many was represented Ireland in many countries abroad.

I had the pleasure of working with many of the old guard of Aer Lingus supervisors. To a man, they were the real thing. What they didn't know about aviation wasn't worth knowing.

All lost now.

Tenger

asdfg! wrote: »

.....Working for Aer Lingus in the old days and you could find yourself sent abroad on anywhere from Africa to Asia.

The Aer Lingus that exists nowdays is merely a shadow of the old Aer Lingus.


Younger people have no idea how significant Aer Lingus was at one stage. It was in effect an arm of the Irish government and in many was represented Ireland in many countries abroad.

I had the pleasure of working with many of the old guard of Aer Lingus supervisors. To a man, they were the real thing. What they didn't know about aviation wasn't worth knowing.

I am similar...worked with guys who joined in the 1960's and remember the HOB being build. Another guy was in the COngo in the 60's having issues telling soldiers to put the AK's in the hold.....
At 1 point EI were one of the only airlines in the world with a computer...they did ticketing for other airlines....1 guy I knew did a computer programming course in 1969 in order to operate the original EI 'computer'

In the 60's, 70's, 80's EI were seen as a neutral party in the era of the Cold War. Hence they were popular with Mid East, African, Asian start up airlines.

Jhcx

If Aer Lingus were so successful in varies company investments where did they go so wrong. I'm not saying the businesses were profitable but from the sounds of it they had all their fingers and toes dipped into different sectors making them a world class company if they wanted to. Of course I never knew of the old Aer Lingus I'm the young gen. While I do love Aer Lingus in one had I dislike them in the other just for what they have become. And now that I know what they were I'm not too impressed. Just mearly saddened at what the company was to what it has become "A premium hybrid Ryanair" - IMO

Tenger

Jhcx wrote: »

If Aer Lingus were so successful in varies company investments where did they go so wrong. I'm not saying the businesses were profitable but from the sounds of it they had all their fingers and toes dipped into different sectors making them a world class company if they wanted to. Of course I never knew of the old Aer Lingus I'm the young gen. While I do love Aer Lingus in one had I dislike them in the other just for what they have become. And now that I know what they were I'm not too impressed. Just mearly saddened at what the company was to what it has become "A premium hybrid Ryanair" - IMO

During the 1990's they divested themselves of all the extra stuff........I think it was part of the Cahill Plan in 1993-94.......so they could streamline as just an airline. Willy Walsh finished the job 10 years ago when he asked the question "if we're an airline, why are we making sausages?"

Rocky Bay

Somewhere I have the prospectus from the I.P.O. and an advertisement from a financial newspaper a.k.a. a ''tombstone announcement" announcing the I.P.O.

basill

You have to remember that as a state owned airline pre IPO AL was run by the government essentially as a cash cow. When they needed cash why go to the treasury when they can lift out millions of punts from ALs bank accounts. Businesses were sold off to raise more cash. If you look back at the property that AL owned such as Terminal 1 in LHR and the hotels alone in todays terms their value would be huge.

People love blaming AL for charging 500 quid to go to LHR. They should focus their attention on the UK and Irish governments that facilitated the monopoly for their own gains.

What is interesting is how we are going full circle to a certain degree at the moment. We have a commuter airline in the guise of Aer Arran operating under a licence which is low cost and low risk to AL. During the winter we are sending aircraft and crews off on contract to Novair with a team of people working fulltime at sourcing more of these contracts.

All we need now is to get back into dedicated freight and have a holiday company and we are pretty much back to where we were all those years ago but without the high cost base and a government draining cash out of the bank accounts.

L1011

EI's hotel chain at its peak, before the selective disposals of key properties started, was HUGE. At least one decent hotel in basically every city they served, plus one in every major city that British Midland served as they'd bought their hotels too.

Suasdaguna1

basill wrote: »

All we need now is to get back into dedicated freight and have a holiday company and we are pretty much back to where we were all those years ago but without the high cost base and a government draining cash out of the bank accounts.

Great post....re above its now the unions draining cash out of the company. If the post on the FR website about the amount of €€€€€€ the unions have sucked out of AL culminating approaching 100m € ......jezuz this can't be true. FR also say this 140m € final gesture to placate all and sundry to avoid industrial unrest is tosh.....there'll be more injections. Surely this is no way to run a public company which is answerable to shareholders especially with a die hard union head of d begg on the board of guvnors who has a mandate to the shareholders and not his minions in the unions?

Am I reading this right or what?

urajoke

Suasdaguna1 wrote: »

Great post....re above its now the unions draining cash out of the company. If the post on the FR website about the amount of €€€€€€ the unions have sucked out of AL culminating approaching 100m € ......jezuz this can't be true. FR also say this 140m € final gesture to placate all and sundry to avoid industrial unrest is tosh.....there'll be more injections. Surely this is no way to run a public company which is answerable to shareholders especially with a die hard union head of d begg on the board of guvnors who has a mandate to the shareholders and not his minions in the unions?

Am I reading this right or what?

Do you believe everything Ryanair MoL says, I don't, I prefer to educate myself on these matters. Especially when mouth says anything.

Bessarion

Suasdaguna1 wrote: »

.......If the post on the FR website about the amount of €€€€€€ the unions have sucked out of AL culminating approaching 100m € ......jezuz this can't be true. FR also say this 140m € final gesture to placate all and sundry to avoid industrial unrest is tosh.....there'll be more injections. Surely this is no way to run a public company which is answerable to shareholders.........

Well the 140M injection will be used to wind up the current pension fund. The new pension fund will be watertight in terms of who is owed what and who is responsible.

The cash injection is due to the fact that the pensions fund has been in trouble for several years but EI never really dealt with it. In the meantime they still recruited staff and as part of their contract made them join a failing pension fund. (all EI new employees HAD to join this fund up until 12-18 month ago) In effect EI sucked money from their staff to cover pension payments to members of a 50 year old multi-company pension fund.

So while EI did not have a legal obligation to inject cash they had a moral obligation.


All airlines 'hedge' fuel supply and costs. Look at the 140M as a form of salary hedging.....EI now know their staff costs for the next 4 years. A lot can happen in 4 years but for EI they have 1 cost plateaued until then.

Looking from a shareholder point of view.....this E140M pay out ensures salary stabilisation until 2017, and negates any threat of pension related industrial unrest. As we can see from yesterday shares have climbed in price...so already shareholders have seen a small benefit from this cash injection that FR are condemning.

From an employee point of view, while their salary is halted they at least have the security of knowing they will be getting most of their pensions rather than the 5-15% that was a possibility. They will migrate to the new defined benefit scheme and start anew.

de biz

GPA was founded by the vision of Dr.Tony Ryan and was a World Class operation.Without his drive Irish and European aviation would be in the dark ages.

One of the EI subsidiaries which also deserves a mention was Irish Helicopters.

eusap

Are there any books written about the history of AL, this thread has educated a young aviation nerd to things i never knew AL where involved in

L1011

Yes.

There's the official one: http://www.collinspress.ie/doesnt-time-fly.html amongst others. Older one called "The Flight Of The Iolar" which I've yet to get around to buying. Amazon throws up one called "Pioneers in Flight" that I've not heard of before.

Bessarion

eusap wrote: »

Are there any books written about the history of AL, this thread has educated a young aviation nerd to things i never knew AL where involved in

Flight of the Iolar was written in the late 80's and tells of the varied EI interests. The latest book "Doesn't Time Fly?" was published for the 75th anniversary, while a nice read it is more about pretty pictures than substantive info.

pclancy

Interesting stuff.

I remember writing to them in the 80s as a boy asking "how do I become a pilot" and they responded not only with a typed page on how to become a pilot but a large brochure that listed a lot of their other business ventures mentioned above including info on their hotels and overseas travel agencies etc. Wish I'd kept it, it was a fascinating read at the time and really showed me how big they were and good for Ireland's overseas image.

Today's market reality is very different to the world they would have faced by then so no doubt their old business model simply wouldn't have survived todays tight margins and competition.