Aer Lingus considers using net cash for European acquisitions

MuffinsDa

Just came across this in the FT, which seems to have gone unnoticed here:

Financial Times: Aer Lingus considers using net cash for European acquisitions

"Aer Lingus could use its €420m of net cash to pursue merger and acquisition opportunities in the European airline sector, according to the Irish airline’s chief executive."

Interesting! Any thoughts of whether this is likely to happen and who would be the likely candidates? Wouldn't cityjet have made sense (too late now). Flybe?

smurfjed

I would have thought that any extra money should go into the pension fund, it's hard to claim that the airline doesn't have the money if they are seeking to purchase airlines.

MuffinsDa

smurfjed wrote: »

I would have thought that any extra money should go into the pension fund?

That would be the worst possible thing to do with extra cash from business and shareholders view, and they don't HAVE TO do it. But that is part of the reason EI union members are on the war path, they want a slice (or all) of the pie (that they don't own - aside from through their shares).

But lets not drag this into a discussion of pensions issue, there's another thread for it. Lets stay on topic on the possibility of M&A.

A319er

Well this is a good topic,
EI have limited scope to expand as an Irish based and focused Airline
Eastbound is already well served EK EY TK plus all the legacy carriers.
The USA is going to grow , I would love to see EI and TAP get together , South America would make a nice triangle . . TP were for sale I think, or maybe
SN for Africa? Both have Airbus equipment as well as regional feeds ,
Let's hope AZ or LOT are out, of course FLYBE are seeking funds but maybe not a good fit

Razor44

EI to buy another airline? really?

Jhcx

Why couldn't Airline like virgin buy Aer Lingus. It would be good as they have a lot of long haul Aer Lingus have a European market plus good connections. And with delta owning some of Virgin the network would be massive.

L1011

Jhcx wrote: »

Why couldn't Airline like virgin buy Aer Lingus. It would be good as they have a lot of long haul Aer Lingus have a European market plus good connections. And with delta owning some of Virgin the network would be massive.

Virgin are in no financial state to buy anyone.

EI have to be careful not to end up throwing their cash in to someone else's debt hole when they make any buys. SN is a possibility for a number of reasons - LH seem to be shying off taking full control, and Mueller was at the original Sabena.

donvito99

It'd be quite satisfying for EI management I should think if they bought FlyBe, although they should probably avoid them like the plague at the minute.

A319er

Yes Brussels airlines 45% stake owned by LH and I am are Mr Mueller has good insight into this operation, I think a good fit and LH don't seem to want to develop BRU as a separate STAR hub ! Common fleet too all hangs on getting pension sorted of course as nett cash position could change

sully2010

€420m net cash is really not much in aviation terms and they should be concentrating on keeping it and bolstering it for unforeseen events that inevitably happen in aviation and have detrimental effects on airlines finances.

Acquisitions, are they actually trying to destroy themselves and the good work of the last few years.

A319er

Yes fair point but they do need to spread their risk a bit as too much relies on USA tourism and IRISH passengers, tapping a bigger slice of annother market
Might add new revenue which was why it thought of South America , even Africa via BRU , EI need to grow as there is only so much costs to cut

smurfjed

Problem with buying old airlines is that you are buying their staffing problems as well, and 420 million can disappear overnight.
So to me they would be better off consolidating their present position, doing whatever they can to resolve union issues when justified, rather than buying another airline in order to raise shareholders dividends.

A319er

Agreed re old airlines Brussels airlines is new okay reborn , plus well you can get
A significant shareholding to gain control and maybe not use all cash ?
Just a thought but a current stand alone minnow like EI is going to be a target one day for a bigger airline, not just FR either, maybe go the JV route and start up in Greece ? EI tried this before in Turkey and Spain , did ok but cashed out when one of the cyclical aviation recessions hit , Pegasus and futura were doing ok, maybe worth looking at it again , but yes best to avoid old airlines ,

L1011

A319er wrote: »

EI tried this before in Turkey and Spain , did ok but cashed out when one of the cyclical aviation recessions hit , Pegasus and futura were doing ok, maybe worth looking at it again , but yes best to avoid old airlines ,

Well, Mueller does seem to be re-doing multiple of the things Aer Lingus did in the past - ACMI (Novair/Virgin) being the most notable one. I had money on it being a hotel chain rather than a charter airline next though :pac:

Stovepipe

Hi there,
Aer Lingus used to make a pile of money on third-party maintenance and handling, training of engineers and pilots and some of it's third-party items like hotels. All gone.........maybe I've missed something but that Eu 420M is about half of what it stated that it had in the bank. I guess it's burning off cash rather than give it to the pension fund....whoodthunkit?

regards
Stovepipe