10 reasons why IRL should say no to IAG on their Aer Lingus offer

sock puppet

a qualified accountant who's valued a company without any consideration given to its liabilities. seems legit

Impetus

sock puppet wrote: »

a qualified accountant who's valued a company without any consideration given to its liabilities. seems legit

The only material liability is the finance lease obligations just over 300 mil. It is hardly material in the context of the value to IAG - ie comparing a 1.4 € bn offer with a €3.5 bn asset value. Other balance sheet issues largely cancel out each other.

Question..... who is your sugar daddy please (as in who is your employer)? The company is solvent, and part of the national infrastructure. Ryanair would dump Ireland if it could achieve a lower corporate income tax rate in the morning within EU, unless the flight in question auctioned off its seat value at a higher value than was available elsewhere in the EU. Which puts IRL competing with 500 million other potential passengers - and taking into account its 4.5 million pop and economic screw-ups. Perhaps IAG would like to have a 12.5% corporate income tax rate, over time? A few more acquisitions and it would no longer be a British company etc. Who knows what the real hidden agendae are?

FreudianSlippers

LHR slot worth is massively over-valued by OP and the media.

Impetus

It would be nice if the Irish politicians who have suddenly come out in support of selling the 25%+ government share in Aer Lingus would show us their plan to deal with the new proposed scenario.

Dublin airport’s runway is operating to full capacity, especially at morning and evening rush hours. As a regular flyer, one has to put up with baggage handling and passport control lines on a routine basis – both at the Irish end, and at the other end because Ireland refuses to join Schengen passport free travel zone. How much will it cost to build runway # 2, and being on an island that implies you also need a runway #4 to deal with the wind direction issues. And how will their constituents react to all the new aircraft noise – noise in parts of the city where this has not been an issue so far?

If BA decides to dump the unwashed masses who use their services between GB and the US via Dublin to sneak past the huge queues at US and British airports for control purposes – they are simply dumping this baggage on the Irish tax payer and tourist and business traveller who will have to line up behind them for an hour or two to get past the system. To “create” 500 or so “jobs”? These will be expensive jobs – if they ever materialise.

Basically these idiots are selling an airline worth x (in terms of profitability), but which has over 3 billion worth of assets in terms of landing rights, aircraft and equipment and sundries. Dumping it for €1.4 billion. Stupid or what? In return for five year landing rights at LHR. How short-term a view. The landing rights are there now, and will continue ad infinitum under the status quo – so where is the gain for Ireland please?

Add to that the cost of new runways to allow the traffic to “create” the 500 or so additional jobs and you won’t have much change from 5 billion € in terms of wasted resources (trading landing slots at LHR for having to pay for replacement landing capacity at Dublin to handle the overflow).

Making Dublin airport pig inefficient and overcrowded in the process.

Simply because the Brits don’t want to carry the financial and political cost of heavy air traffic and adding a runway at LHR.

Nice airport has about half the traffic of Dublin – however it has two parallel runways to service the load. Zurich airport has three runways to service 25 million PAX. Dublin airport has 22 million PAX. Zurich has no island wind issue, which allows them the luxury of spreading landing noise in the region over different approaches depending on time of day and they can dedicate one runway for all take-offs and one for all landings. Which reduces the gap between each movement, making the system more efficient.

Willie Walsh's plan is bad for Ireland. Willie is being well remunerated by IAG to foist this proposal.

BoJack Horseman

So v1.0 of your manifesto didn't go as well as you hoped so your trying again?

Susandublin

Government should not owns any part of a private company - market should be able to determine value of a company. Airline, telecom, water, bank etc - let the government govern and let the market determine business. The market is better than any individual or small group of individuals.

Nody

Susandublin wrote: »

Government should not owns any part of a private company - market should be able to determine value of a company. Airline, telecom, water, bank etc - let the government govern and let the market determine business. The market is better than any individual or small group of individuals.

While I agree in theory I disagree in practice; the simple fact is Ireland is way to small to have a properly working market for fundamentals such as telecom network, power network etc.

Instead I'd expect the state to own the core network (backhaul) and rent it out the capacity to companies and under no circumstances run their own side company that uses the same network as well to "compete". Said companies should be required to be run on a competitive enough basis (i.e. rotate between the big four to audit their cost base vs. other European companies every three years for what they are allowed to set as cost, tariff etc. to ensure it does not become another bloated quango). As a side note I don't consider Aer Lingus to be part of the core that needs to be kept as having a state airline is definitely not needed...

Impetus

I have no problem with gov.ie selling the remaining part of Aer Lingus - the issue in my mind is that BA is the worst partner. It would decimate the European route system of EI (ie IRL <> mainland Europe) - especially, but not only the remaining connections out of Cork etc. And it will (if it works) lead to Ireland becoming a dumping ground for trans-Atlantic traffic - imposing on Ireland the Heathrow and JFK border control inefficiency issues.

Airlines whose hub is in a different geographic market would offer a far better relationship. This would allow more seat km of traffic to flow in the EI part of the group. Or a group of smaller carriers - each trusted in their local market who have no trans-Atlantic capacity of their own. The Aer Lingus tail will never wag the BA dog. The US airline market is highly consolidated, and all the big carriers are in poor financial condition, their fleets are antiquated for the most part and service is awful. This is part of the Anglo Saxon obsession with big and control. Which is the opposite of providing a quality service to the customer in all respects. I probably fly more than anybody else on this thread so I have a vested interest - but I have no shares in Aer Lingus, or any other airline.

BA is only offering 5 years retention of the LHR slots. If Ireland Inc buys into this deal, it seems to me that it is incredibly short termist thinking. Thinking being the key word, because I don't believe that much thought has gone into Walsh's proposal from the Irish end. It reminds me of the property market greed of 7 or 8 years ago. A completely dumb strategy. Anyone who criticised it like yours truly was deemed off their tree.

Similar issues go for broadband. Successive governments spent zillions supporting wireless "broadband" for rural areas. They are now waking up to the fact that wireless is not the solution and fibre is the best long term solution, even in remote rural areas.

Icepick

Impetus wrote: »

Basically these idiots are selling an airline worth x (in terms of profitability), but which has over 3 billion worth of assets in terms of landing rights, aircraft and equipment and sundries. Dumping it for €1.4 billion. Stupid or what?

So I assume you all your net worth in AL shares?
Because the market values the airline at even less.

Impetus

Icepick wrote: »

So I assume you all your net worth in AL shares?
Because the market values the airline at even less.

May I suggest that you study opportunity cost, and perhaps marginal pricing?

By "AL" I presume you mean EI? I have no investments in any airlines. I don't expect EI shares to suddenly jump to a sum equal to say 3 billion € divided by the number of issued shares of the company.

The offeror (IAG) wants to get their hands on strategic assets on the cheap - and the value of these assets have nothing to do with the share price of EI, in valuation terms or in national interest terms. Lots of companies are sold for less than the sum of the parts, and this is where hedge funds and private equity make much of their profit. We have had enough of this style of investment strategy in eircom, to do the country for a century and more.

Icepick

Impetus wrote: »

May I suggest that you study opportunity cost, and perhaps marginal pricing?

By "AL" I presume you mean EI? I have no investments in any airlines. I don't expect EI shares to suddenly jump to a sum equal to say 3 billion € divided by the number of issued shares of the company.

The offeror (IAG) wants to get their hands on strategic assets on the cheap - and the value of these assets have nothing to do with the share price of EI, in valuation terms or in national interest terms. Lots of companies are sold for less than the sum of the parts, and this is where hedge funds and private equity make much of their profit. We have had enough of this style of investment strategy in eircom, to do the country for a century and more.

no? thought so

andrew

Nody wrote: »

While I agree in theory I disagree in practice; the simple fact is Ireland is way to small to have a properly working market for fundamentals such as telecom network, power network etc.

What you're sorta getting at there, and something that's relevant in terms of whether the government provides it, is the idea of Natural Monopoly.

hfallada

OP I honestly cant see your point. The Irish Government will get money for their share holding in Aer Lingus, which will help with our constant deficits. There is no point of them having a share holding for the sake of having a share holding.

I dont get the whole point of Heathrow slots being so important. Most Irish people get international flights via Dubai for long haul to Asia or Australia. There is also the options to connect in Amsterdam, Istanbul,Zurich, Paris, Frankfurt and now Ukraine. Heathrow is no longer than important for Long haul. There is also plenty of flights from Dublin to London City. The Heathrow slots arent that important as you can fly to London with Cityjet. The whole idea that competition to London will disappear over night is not relevant.

Aer Lingus is tiny and over time may fail as it cant compete with all other airlines increasing in size. Ryanair, Emirates etc were tiny 20 years ago. But are huge companies now. Long term its hard to see how Aer Lingus can compete

Impetus

"The number of flights linking smaller British airports to international flights from Heathrow has “steadily declined over the last decade” because of a shortage of landing slots at the London airport, a House of Commons committee has said." All the others have melted away, because of the low gross margin per slot pair issue. There is more money to be made with BA’s monopoly long haul routes out of LHR.

If BA wants to re-assign Aer Lingus slots after 5 or 10 years, and an Irish government is clueless enough not to see 2020 or 2025 arrive (because I suspect they do not anticipate being in power at that point in the future), a responsible government should at least insist on a break-up price basis for Aer Lingus. This value is far higher than the offer price of EUR 1.4 billion – over twice as high, which is based on going concern “market value”.

And if Dublin Airport is going to be used by BA for mass “back-door” access to/from the USA and GB, Ireland Inc deserves compensation for the cost of putting up the infrastructure required to handle all this traffic. This includes at least one extra runway at Dublin airport, if not two. And probably another terminal by 2020 to 2025 to handle all this volume of traffic. Add to that noise pollution for residents on the pathway of the new runway(s). The alternative is massive Heathrow style queues at Dublin which will damage the utility of the country as a place to do business.

If this BA “promised” extra traffic flow is not going to materialise, where are the “promised” jobs going to come from?

http://www.irishtimes.com/business/transport-and-tourism/uk-airports-losing-business-due-to-heathrow-slots-committee-hears-1.2137598

Godge

Impetus wrote: »

"The number of flights linking smaller British airports to international flights from Heathrow has “steadily declined over the last decade” because of a shortage of landing slots at the London airport, a House of Commons committee has said." All the others have melted away, because of the low gross margin per slot pair issue. There is more money to be made with BA’s monopoly long haul routes out of LHR.

If BA wants to re-assign Aer Lingus slots after 5 or 10 years, and an Irish government is clueless enough not to see 2020 or 2025 arrive (because I suspect they do not anticipate being in power at that point in the future), a responsible government should at least insist on a break-up price basis for Aer Lingus. This value is far higher than the offer price of EUR 1.4 billion – over twice as high, which is based on going concern “market value”.

And if Dublin Airport is going to be used by BA for mass “back-door” access to/from the USA and GB, Ireland Inc deserves compensation for the cost of putting up the infrastructure required to handle all this traffic. This includes at least one extra runway at Dublin airport, if not two. And probably another terminal by 2020 to 2025 to handle all this volume of traffic. Add to that noise pollution for residents on the pathway of the new runway(s). The alternative is massive Heathrow style queues at Dublin which will damage the utility of the country as a place to do business.

If this BA “promised” extra traffic flow is not going to materialise, where are the “promised” jobs going to come from?

http://www.irishtimes.com/business/transport-and-tourism/uk-airports-losing-business-due-to-heathrow-slots-committee-hears-1.2137598

If we were guaranteed all that traffic, we should build the extra runways and terminals because it would be well worth it.

BoJack Horseman

3rd thread from the OP on the same topic?

Why do Heathrow slots matter?

Is there anything more overblown in importance?

Godge

BoJack Horseman wrote: »

3rd thread from the OP on the same topic?

Why do Heathrow slots matter?

Is there anything more overblown in importance?

I just don't get it.

Travelling through Heathrow is usually more expensive, more inconvenient takes longer and more hassle than connecting through any other airport.

Impetus

BoJack Horseman wrote: »

3rd thread from the OP on the same topic?

Why do Heathrow slots matter?

Is there anything more overblown in importance?

They (slots) only matter to me because the offer price for the company barely covers the value of the slot pairs allocated to Aer Lingus.

I would love it if Aer Lingus could not land at Heathrow and instead focussed its route network to providing more frequent services to even more continental European and other destinations. Obviously that is a "selfish me" option, because some people have reason to land at LHR.

But the other side of that coin is a reduction of Aer Lingus direct routes to the continent and elsewhere, and trying to force people to connect at LHR to fill more seats on BA flights. Which would lead to having to negotiate two over-crowded airports, go through two sets of security controls (an invention of British airports), and waste most of the day even on short continental trips. Not to mention having to put up with BA over-pricing of an inferior travel product.

Michael O'Leary would love it too. He could add a "Heathrow avoidance surcharge" to every ticket he sells. Ireland would not benefit by squandering control over its national carrier to Mr. Walsh.

View

Impetus wrote: »

They (slots) only matter to me because the reduction of Aer Lingus direct routes to the continent and elsewhere, and trying to force people to connect at LHR to fill more seats on BA flights.

A reduction of direct routes from Dublin by BA would provide opportunities for their competitors on those routes, hence it would make minimal difference to passengers.

Likewise the competiting airlines would be delighted to persuade more passengers to re-direct their long-haul flight connections from LHR to the other major European airports.

hfallada

BoJack Horseman wrote: »

3rd thread from the OP on the same topic?

Why do Heathrow slots matter?

Is there anything more overblown in importance?

Because TD seem to think that its the 1980s and is still one of the most important airports in the Europe/ the world. Yet most young people use the cheaper London airports because of Ryanair.Most business travellers use the more convenient London city for flying into London. Most people going to Asia or Australia now connect via Dubai, as the flights are cheaper and the planes are better than most European Airlines.

Most TD probably havent flown Ryanair or any non-European airlines. The Airline industry is completely different post 9/11. They still seem to think Heathrow is the most important Airport in the world and Aer Lingus is the best airline. When Aer Lingus is more like a more expensive version of Ryanair with long haul.

If the number of flights to Heathrow was halved tomorrow. Most business travellers/leisure flyers wouldnt be bothered in the slightest. They would use other london Airports or connect in different European cities. Heathrow is a horrific airport. The fact that most of Aer Lingus long Haul growth came from people in the UK, flying to Dublin, then flying to the US. Rather than going from Heathrow direct highlights that

Impetus

hfallada wrote: »

Because TD seem to think that its the 1980s and is still one of the most important airports in the Europe/ the world. Yet most young people use the cheaper London airports because of Ryanair.Most business travellers use the more convenient London city for flying into London. Most people going to Asia or Australia now connect via Dubai, as the flights are cheaper and the planes are better than most European Airlines.

Most TD probably havent flown Ryanair or any non-European airlines. The Airline industry is completely different post 9/11. They still seem to think Heathrow is the most important Airport in the world and Aer Lingus is the best airline. When Aer Lingus is more like a more expensive version of Ryanair with long haul.

If the number of flights to Heathrow was halved tomorrow. Most business travellers/leisure flyers wouldnt be bothered in the slightest. They would use other london Airports or connect in different European cities. Heathrow is a horrific airport. The fact that most of Aer Lingus long Haul growth came from people in the UK, flying to Dublin, then flying to the US. Rather than going from Heathrow direct highlights that

At the moment, GB's escaping Heathrow to use DUB to fly transatlantic is tiny in the scheme of things - ie it is manageable within existing resources. Something like 35% of Aer Lingus's transatlantic PAX volume is not commencing their journey in IRL/NI. A traffic diversion via DUB by BA would completely change the scale of movements at Dublin. If that diversion of people does not take place, where are the jobs going to come from? (ie the political promise).

Impetus

IAG/BA’s offer wants to limit landing fee increases – so there will be little or no new money to pay for new runway(s) and terminal(s).

Mr Walsh and Co wants to have their cake and eat it.

http://www.independent.ie/business/irish/airport-charges-deal-could-end-the-aer-lingus-saga-31066823.html

Impetus

And BA is very expensive, especially considering the poor quality of the experience they provide in the air and on the ground, in my view. Their website is showing a lowest fare from LHR to JFK tomorrow (one way) of EUR 1'645. Business class is EUR 7'240.

Compare and contrast with Aer Lingus where the fares on offer today for tomorrow are EUR 495,71 economy and EUR 3'019,71 business.

EI would be far better off spending money on its websites and doing deals with other airlines (eg Ryanair) to offer connecting services from more continental European destinations via IRL if it wants to increase load factors on transatlantic.

I have come across many people on my travels who make up their own connections - eg via Ryanair from the Continent to Dublin and onwards via EI on transatlantic leg - and find it a better experience and cheaper - even if it involves a hotel overnight. Aer Lingus could be selling overnights at Dublin airport hotels to increase the connectivity grid for starters - hotel built into the price offered with seamless reservation into the hotel system.

Icepick

Stop talking about this as if the government owned 100% or even 51% of Aer Lingus.
Even Ryanair has more shares.

L1011

Impetus wrote: »

They (slots) only matter to me because the offer price for the company barely covers the value of the slot pairs allocated to Aer Lingus.

This is only the case if you assume that each slot can be sold singly for the $20m value SAS got for their first recently sold paid

As their second sale for $6m shows, as soon as you start selling multiple the value collapses. They could never get $20 for each slot.

Impetus

L1011 wrote: »

This is only the case if you assume that each slot can be sold singly for the $20m value SAS got for their first recently sold paid

As their second sale for $6m shows, as soon as you start selling multiple the value collapses. They could never get $20 for each slot.

Emirates and Co can land and take-off an Airbus A-380 using a single slot pair at LHR, and this aircraft can take around 800 PAX to UAE - where there is unlimited airport space, airside ***** hotels, and the trip typically costs a fraction of the cost of BA or similar airlines. I travel a fair bit, and I would like to spend time in UAE/Dubai on most trips. However I usually end up landing, spending an hour or so in a lounge, consuming champagne and salmon gravlax and moving on. At a fraction of the cost that BA would charge on the same route. With 10X better service.

Even Richard Branson has stated that a BA takeover of Aer Lingus would lead to higher fares. After a few flights on Virgin to China, I suggested to Branson that he take legal / GB-ASA action against BA for their then claim that they were the "world's favorite airline". Branson would have none of it. So it seems to me that Branson is really happy with BA's actions to dominate the marketplace, juised up by Anglo Saxon world domination/racism agenda - in the global context?

Irish politicians seem to be similarly poised to "juice up" the Anglo Saxon / IAG control over Ireland's transport infrastructure and as a result impost higher air fares (going back to the bad old days) on people travelling to/from Ireland.

May those politicians rot in hell, along with those who contributed to the property problem in Ireland. Speaking as a non-victim of same.

Farmer Pudsey

Impetus wrote: »

Emirates and Co can land and take-off an Airbus A-380 using a single slot pair at LHR, and this aircraft can take around 800 PAX to UAE - where there is unlimited airport space, airside ***** hotels, and the trip typically costs a fraction of the cost of BA or similar airlines. I travel a fair bit, and I would like to spend time in UAE/Dubai on most trips. However I usually end up landing, spending an hour or so in a lounge, consuming champagne and salmon gravlax and moving on. At a fraction of the cost that BA would charge on the same route. With 10X better service.

Even Richard Branson has stated that a BA takeover of Aer Lingus would lead to higher fares. After a few flights on Virgin to China, I suggested to Branson that he take legal / GB-ASA action against BA for their then claim that they were the "world's favorite airline". Branson would have none of it. So it seems to me that Branson is really happy with BA's actions to dominate the marketplace, juised up by Anglo Saxon world domination/racism agenda - in the global context?

Irish politicians seem to be similarly poised to "juice up" the Anglo Saxon / IAG control over Ireland's transport infrastructure and as a result impost higher air fares (going back to the bad old days) on people travelling to/from Ireland.

May those politicians rot in hell, along with those who contributed to the property problem in Ireland. Speaking as a non-victim of same.

What a load of tripe.

Impetus

If the sale of Aer Lingus to IAG is allowed to go ahead, the cost of air travel to/from Ireland will double. Especially to/from North America and GB. Airline crews won’t benefit from these higher prices – quite the opposite with complaining passengers. The extra cash will go into a dark pool.
BA business class to JFK is currently EUR 7’167 equivalent. Because they can get away with it. (Shortage of runway slots etc). BA “Economy” one way is EUR 1,630.

Aer Lingus economy to JFK is EUR 735 on the same date. Or €2’418 business.

BA prices are 2x to 3x higher than Aer Lingus.
The quality of service is horrible on BA, as it is on US airlines. And the security paranoia creates needless hassle for ordinary, non-“terrorist” travellers.

Britain and America created “terrorism” by their invasion and attempted cultural take-over of other countries. There would have been no IRA if GB behaved in a civilised manner (eg like Switzerland). And there would be no ISIS if GB/US did not attempt to steal control of Iraq under the “weapons of mass destruction” lie.

As an Irish citizen I do not want my national airline to be taken over by this lot. Period.I like neutrality. And I don’t want a national airline to be owned by a foreign based company in the event of a Brexit. (Not to be confused with a GRexit – because the Greeks have loved being Europeans for centuries). And I don’t want to increase the risk of travel by becoming a victim of terrorism by some poor disenfranchised group of people who get confused and mix up Aer Lingus with Britishness.

It seems to me that the gov.ie and EU competition authorities have been clueless on the competition impact of this transaction. And Ireland has been clueless about the impact on Irish airports of the event in terms of handling PAX flow, and extra runway movements and how service levels will fall and queues will increase as people who have zero interest in visiting Ireland get pumped through a non-system devised by Willie Walsh & co.
US multi-nationals based in Ireland have picked Ireland because it is easy to get to and from the US. The proposed IAG transaction will bring hell to the traveller to/from the US.

Allowing IAG to steal Aer Lingus and its brand, will probably cost Ireland more than the post Celtic Tiger era debt.

This "deal" is just an under-priced acquisition of the goodwill of a neutral state airline by another airline which is based in a country that are hated by by probably 50% of the population of the planet. It is impossible to put a price on Aer Lingus's goodwill, in this context.

The politicians who allow the transaction to take place deserve to be put on the firing line, and taken out by expert marksmen, at the earliest ballot box opportunity.

Gloomtastic!

Eh, aren't you a few months late with your little rant? The deal is done!

jimmycrackcorm

Impetus wrote:

As an Irish citizen I do not want my national airline to be taken over by this lot. Period.I like neutrality. And I don’t want a national airline to be owned by a foreign based company in the event of a Brexit. (Not to be confused with a GRexit – because the Greeks have loved being Europeans for centuries). And I don’t want to increase the risk of travel by becoming a victim of terrorism by some poor disenfranchised group of people who get confused and mix up Aer Lingus with Britishness.

In case you didn't realize it, Aer Lingus hasn't been our national airline for many years. You could consider that Ryanair is. Also the last few times I flew to the U.S. other airlines were much cheaper.