Ryanair's bid for Aer Lingus

Old Oct 5, 06, 3:49 am
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Ryanair's bid for Aer Lingus

Not sure if this is the right forum for this but as Aer Lingus are still part of OW for a few more months...
http://news.bbc.co.uk/1/hi/business/5408780.stm

Ryanair chief Michael O'Leary said the move was a "unique opportunity" to form a "strong" Irish airline.
Personally I can't see this as a good thing.
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Old Oct 5, 06, 6:39 am
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A classic taxpayer rape IPO; it was originally to be issued at 2.80 per share, and reduced to 2.20 due to "market conditions"....obviously Ryanair thinks 2.80 per share was a fair price. Presumably the motivation is twofold; to buy assets cheaply and to develop a fortress hub at DUB. The effectiveness of the latter depends a lot on how the airport reacts (another Ryanair initiative is to try to browbeat DUB airport into not building a new terminal per their current plan, but to have Ryanair build a new terminal per its own plan, at half the cost). Which is a great plan for Ryanair, as it effectively locks out future LCC competition at DUB due to lack of airport space.
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Old Oct 5, 06, 7:49 am
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It will be interesting to see whether Ryanair would continue to operate Aer Lingus' transatlantic routes, and if so, what effect this will have on transatlantic fares in Y and on the North American-based airlines. It would depend on what pricing strategy Ryanair adopt, and of course on whether they expand (since Aer Lingus is only significant in terms of traffic on a handful of routes).
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Old Oct 5, 06, 7:57 am
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This has long been speculated as the reason that EI chose to depart from OW.

Speaking from direct experience in my industry, these kinds of discussions typically take years with many aborts before an offer reaches the stage of being made public.
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Old Oct 5, 06, 10:14 am
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[QUOTE=millionmiler]This has long been speculated as the reason that EI chose to depart from OW.

Of course if BA were to get involved in a bidding war and take over EI, then we could see EI back in OW at some stage
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Old Oct 5, 06, 11:52 am
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I haven't been following the privatization of EI closely (and don't have time to research it now, so the following may be wrong), but wasn't there an aborted privatization in 2004, which was leaked to the press as the way to abort it ... the EI CEO and executives were doing a deal that would net them a few hundred million, and they were sacked afterwards.

Given that EI has been profitable for several years now under difficult circumstances, and has some good assets, the Ryanair bid is bound to attract attention (though I doubt BA will counter-offer). Interesting to see how this all plays out. In any case, the impact on Oneworld is negligible.
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Old Oct 5, 06, 12:18 pm
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[ In any case, the impact on Oneworld is negligible.[/QUOTE]

Agreed, unless of course one flys regularly to Ireland- then it is a drawback
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Old Oct 5, 06, 12:41 pm
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[QUOTE=eireman]
Originally Posted by millionmiler
This has long been speculated as the reason that EI chose to depart from OW.

Of course if BA were to get involved in a bidding war and take over EI, then we could see EI back in OW at some stage
I don't think that anyone expects that to happen. If BA and EI were in moderate discussions then EI would have delayed their OW departure at BA's request.
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Old Oct 5, 06, 10:12 pm
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I see this as a way for Ryan to expand and from what I read they plan to grow the Aer Lingus brand globally but I am sure this will take a long while to happen.
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Old Oct 6, 06, 12:51 am
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Originally Posted by hobarthoney
I see this as a way for Ryan to expand and from what I read they plan to grow the Aer Lingus brand globally but I am sure this will take a long while to happen.
Ryanair is quoting the AF/KLM merger as their model for this, keeping the EI brand separate but benefiting from access to the "cheaper airplane acquisition by FR" and "cheaper financing by FR". So they are portraying it as a capital cost play (and downplaying labour savings, route consolidation or other operational changes). As for the EI employees cleaning up due to their stock ownership, they own 2.2% of EI directly (and there is an employee trust that owns another 10%). FR has now bought 16% of EI, at prices ranging between 2.20 and 2.80 euro/share, and is offering 2.80 for the balance; however the Irish government owns a blocking interest, so the deal boils down to politics. I cannot see how this can ever work politically, particularly as the EI valuation was revised downwards repeatedly, apparently to below market value based on the FR bid. Finally FR is an all-Boeing shop (and has a contract with Boeing requiring all new aircraft be Boeing). To put things into perspective, FR has over 400 Boeing planes ordered, while EI has a fleet of about 7 A330 (long haul) and 27 A320/321s. Ryanair has a market cap of about USD 10 billion, or bigger than AF/KLM and AA, to put it into perspective.
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Old Oct 6, 06, 12:59 am
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Offer Rejected:

http://news.bbc.co.uk/1/hi/business/5408780.stm
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Old Oct 6, 06, 2:00 am
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Originally Posted by number_6
Ryanair is quoting the AF/KLM merger as their model for this, keeping the EI brand separate but benefiting from access to the "cheaper airplane acquisition by FR" and "cheaper financing by FR". So they are portraying it as a capital cost play (and downplaying labour savings, route consolidation or other operational changes). As for the EI employees cleaning up due to their stock ownership, they own 2.2% of EI directly (and there is an employee trust that owns another 10%). FR has now bought 16% of EI, at prices ranging between 2.20 and 2.80 euro/share, and is offering 2.80 for the balance; however the Irish government owns a blocking interest, so the deal boils down to politics. I cannot see how this can ever work politically, particularly as the EI valuation was revised downwards repeatedly, apparently to below market value based on the FR bid. Finally FR is an all-Boeing shop (and has a contract with Boeing requiring all new aircraft be Boeing). To put things into perspective, FR has over 400 Boeing planes ordered, while EI has a fleet of about 7 A330 (long haul) and 27 A320/321s. Ryanair has a market cap of about USD 10 billion, or bigger than AF/KLM and AA, to put it into perspective.
This all seems to boil down to FR trying to kill off its competition. All the rest is smoke and mirrors.
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Old Oct 10, 06, 12:38 am
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FR pilots want pay parity with EI pilots

FR might have bitten off more than it can chew as their pilots have now filed a wage claim with the Irish labour relations board for their wages to be equal to the pay of EI pilots. I rather suspect the FR plan was the other way around.
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