Should Aer Lingus be privatised:Poll

Cork

Lennoxschips wrote:

But they are making a profit. So why cut even more jobs? Lay people off for the sake of making even more profit?

There is nothing wrong with making an organisation more efficent. The airline industry is cyclical. Profits cound take a nose dive & where does that leave Aer Lingus?

By trimming excess costs - Aer Lingus can better compete with low frills competitors.

Aer Lingus does not need as many cabin crew. These will get jobs in other organisations.

Either Aer Lingus can itself adapt to change or itself will be redundant.

Lennoxschips

Lennoxschips wrote:

But they are making a profit. So why cut even more jobs? Lay people off for the sake of making even more profit?

Good God man.
If a business, any business didn't lay people off if it meant more profit for them(or profit at all in marginal circumstances which easily could be the case in the airline industry) then their competitors will...
Not following suit is a recipe for failure through losing business(as you find you cannot compete with the leaner competitor) and eventual bankruptcy, ie no jobs at all in that business, they'd all be gone.

Tuars

If my experience going through Dublin Airport last week is anything to go by then Aer Lingus needs more staff and not less. There were queues the length of the airport because there weren't enough baggage handlers to keep up with the flow of baggage and the conveyors at the check-in points had to be stopped. It didn't look much better down at the Ryanair end of the hall either.

My problem with the current trends towards privatization and (so-called) free-markets is that it seems that for these companies the shareholder always comes first and the customer comes a very distant second. We can see how Ryanair, for example, continue to degrade the customer experience to satisfy the bottom line. This has gone beyond curbing the luxurious excesses such as in-flight dinners to the point where they now want to introduce tariffs for carrying baggage.

You cannot really compare the US to Ireland since the huge population there means that the power of companies to screw the customer is limited by the number of alternative choices available. In a country as small as Ireland the customer doesn't have that luxury and (as can be seen with Eircom) is ripe for abuse.

If we had a genuine free market in Ireland then maybe I could see the benefits in privatising Aer Lingus. As it stands I am sceptical about the benefits it would have for customers and I would be concerned about the loss of Aer Lingus as a strategic asset. I know this point is sometimes overblown but I believe it is an important consideration especially in light of what happened to our telecoms infrastructure after eircom's privatisation.

Ireland had one of the best telecoms infrastructures in the world at the end of the eighties and this had a huge impact on our economy. Now we have slipped down the scale and lack of investment in the network (due to demands on the shareholders' bottom line) means we are not as attractive a place to do business as we were. I see the same thing happening with Aer Lingus if it is privatised.

It's all well and good to shout about militant trade unions (although that is overblown too given the recent history of social partnership and the sacrifices already made at Aer Lingus) but what's the point of privatising Aer Lingus if we simply replace the tyranny of trade unionists with the tyranny of shareholders?

Cork

Tuars wrote:

what's the point of privatising Aer Lingus if we simply replace the tyranny of trade unionists with the tyranny of shareholders?

tHE POINT IS THAT GOVERNMENTS CAN NO LONGER BAIL OUT TROUBLED AIRLINES.

The government could have sold off SDS a couple of years ago. Before, loss making has lead to its closure.

Monies raised from the sale could be used to fund the infrastructure of this country instead ofbeing tied up in a airline.

Tuars

Tuars wrote:

My problem with the current trends towards privatization and (so-called) free-markets is that it seems that for these companies the shareholder always comes first and the customer comes a very distant second. We can see how Ryanair, for example, continue to degrade the customer experience to satisfy the bottom line.

Don't forget that since the low cost model was applied on routes between Ireland and the UK, more people are flying than ever, ever, ever, before.
These are on the whole, satisfied customers.
When Aerlingus had a near monopoly, it cost over £300 or €400 for your cheapest ticket to the UK.

If Ryanairs charging for baggage is not acceptable to their customers, they'll move to another airline.
Ryan air must know there are reasons why most won't-probably reasons of price.
Now Ryan air aren't stupid, they know how to beat the competition,and despite the moaning and groaning of some, this has made them one of the largest passenger carriers in Europe.
That must equate to strong customer satisfaction.

Remember the customer is always right and companies when there is lots of competition(as there is in the case of ryan airs market) don't ignore the customers wants as to do so would be to lose the customer.
Ultimately that would piss off the shareholders even more as less customers mean less profits and lower share price and earnings per share etc etc.

Tuars

Cork wrote:

tHE POINT IS THAT GOVERNMENTS CAN NO LONGER BAIL OUT TROUBLED AIRLINES.

But under EU law they can't do that anyway, privatisation won't change that. What government can do if it has the will, is to ensure that Aer Lingus operates in a way that complements the economic development of the country. With privatisation that power is severely diluted. I hold eircom as a prime example. Privatisation of eircom has benefited a few well-connected and rich individuals at the expense of the future economic competitiveness of the country.

Cork wrote:

Monies raised from the sale could be used to fund the infrastructure of this country instead ofbeing tied up in a airline.

That wouldn't be the telecoms infrastructure you're on about by any chance...

Cork

Tuars wrote:

Privatisation of eircom has benefited a few well-connected and rich individuals at the expense of the future economic competitiveness of the country.

Privatisation of eircom has benefited the people of this country as the national pensions reserve fund was set up.

Bord Telecom often changed people massive prices to call abroad. Just as Aer Lingus charged people large amounts for flights to the UK.

It was only with de-regulation and competition that brought prices down.

Tuars

Earthman wrote:

Remember the customer is always right and companies when there is lots of competition(as there is in the case of ryan airs market) don't ignore the customers wants as to do so would be to lose the customer.
Ultimately that would piss off the shareholders even more as less customers mean less profits and lower share price and earnings per share etc etc.

Point taken and I'm not against competition per se. I think it has done wonders for Aer Lingus. However, you are assuming a very efficient market with lots of alternatives for the customer and as I already said I don't think this applies in Ireland. Outside the Dublin-London routes the market is very limited. This means that companies can push the customer a lot further than would be deemed acceptable in, say the US, before they go elsewhere. I think Ryanair are a big offender in this case.

I suppose part of the problem is that we have a government that only pays lip-service to regulation. I would regard strong regulation as an essential component to protect the consumers in the Irish market. In the absence of this I think privatising Aer Lingus will not be to the advantage of consumers.

Cork

Tuars wrote:

I would regard strong regulation as an essential component to protect the consumers in the Irish market.

How could an Irish government impose regulation in the face of EU deregulation?

Trade Unions and the labour party got over their anti privatisation mindset with Eircom. Dick Spring even sat on the Eircom Board.

The government really has no interest in owning an airline. They same arguments were used to hype up the importance of Irish Shipping. We are an island nation etc.

It has also no interest holding on to things like 2fm.

Lennoxschips

2fm in it's current form, no. 2fm is in no way a public broadcaster in the way Radio 1 is, it doesn't provide a service to the people. They just play Justin Timberlake all day and have loads of ads and sponsored giveaways. It's a disgrace that they can get away with this as a public broadcaster.

2fm should reform and become a quality music broadcaster.

alleepally

Lennoxschips wrote:

2fm in it's current form, no. 2fm is in no way a public broadcaster in the way Radio 1 is, it doesn't provide a service to the people. They just play Justin Timberlake all day and have loads of ads and sponsored giveaways. It's a disgrace that they can get away with this as a public broadcaster.

2fm should reform and become a quality music broadcaster.

2fm is public service. It's target market is being catered for, just as Radio 1, RnaG and Lyric cater for specific markets. Just because it is Pop radio doesn't mean it's not public service. Don't forget there's a couple of talk shows on (Gerry Ryan in the morning, Dave Fanning in the evening). There's also the news show at 7.30. 2fm also did the transition year schools project for students around the country.

arcadegame2004

Originally posted by Tuars
But under EU law they can't do that anyway, privatisation won't change that.

Yes but if they were privatised they could raise money through share-issues.

Please explain what you and some others here mean when you refer to problems in the telecom-market since Eircom privatisation.

It was probably a mistake for Eircom to maintain control of the local-loop after privatisation. They have been criticised a number of times by COMREG for not alllowing sufficient access to it by their competitors. However, other than that I feel that the privatisation was a good idea. In that context, if ESB is privatised (a proposition I strongly support), the Government probably should retain the lines, while privatising the power-generation section of the company.

But Tuars, I do not accept your contention that Ireland is too small a market to have substantial competition. I find such a notion dangerous. It almost gives the rip-off merchants an excuse to keep on ripping us off, e.g. insurance-companies. Mary Harney has already told the media that a number of foreign insurance-companies are expected to enter the Irish market soon. Also, recall that Bank of Scotland's entry into the mortgage market prompted a fall in mortgage-rates by other banks.

While I am very strongly in support of privatisation in the great majority of cases, I do concede that it should be done in such a way as to ensure that the former state-monopoly does not have an unfair advantage over competitors that might be considering entering the market. In hindsight, it was not the privatisation of Eircom per se that was a mistake, but rather their retention of control over the local-loop. A lesson can be learned here with respect to any future privatisation of ESB, but that lesson is that the privatisation should be carried out in a manner not likely to entrench the existing monopoly of the company. In that context, the actual lines should probably remain in public-sector ownership with the power-generation section being sold off.

I consider competition to be even more important than privatisation though. It would be a good idea if, in advance of future privatisations of state-owned companies, that the Government remove barriers to entry to competitors in the electricity market, gas market, bus-market, and airport-ownership. This would hopefully erode much of the market-share of the semi-state monopolies and therefore have the effect of reducing the power of the public-sector trade-unions to hold us to ransom.

Cork

alleepally wrote:

2fm is public service. Don't forget there's a couple of talk shows on (Gerry Ryan in the morning, Dave Fanning in the evening). There's also the news show at 7.30. 2fm also did the transition year schools project for students around the country.

Lets face it 2fm should be flogged off asap. What is the government doing holding on to a pop radio station?

*cough* bbc radio one etc cough*

2fm's advertising revenue cross subsidises the public service remit of the rest of RTÉ

Tuars

arcadegame2004 wrote:

Yes but if they were privatised they could raise money through share-issues.

They'd hardly be an attractive option if they were in the 'bail out' position that has been suggested.

arcadegame2004 wrote:

Please explain what you and some others here mean when you refer to problems in the telecom-market since Eircom privatisation.

I think you've already done that for me. I agree with much of what you say vis-vis privatisation and competition (and I'm glad you highlight that the two are different). The problem is not that Ireland is too small for competition to work, rather it is the nature of the privatisation that is forced up on us in the name of competition that is the problem. It seems we are following a US-style model which just does not translate to Ireland.

The privatisation of eircom is a prime example. The government facilitated the privatisation so that vested interests and well-connected individuals reaped the rewards. The taxpayer benefited some (it's questionable how much in the long term now that the infrastructure has been compromised) but it's difficult to see how the consumer benefitted (especially given the weakness of the regulator).

It is not privatisation itself that I am opposed to and I am a strong advocate of competition. My concern is that privatisation in itself will not bring all the benefits of competition that are being trumpeted around.

Meanwhile some nice quotes from Michael O'Leary in today's Indo:

"Are we going to apologise when something goes wrong? No we're f**king not," said O'Leary.

Ryanair bans 'push-back' on seats as another frill frays

Whatever happened to "the customer is always right?"

BuffyBot

Tuars wrote:

They'd hardly be an attractive option if they were in the 'bail out' position that has been suggested.

I think you've already done that for me. I agree with much of what you say vis-vis privatisation and competition (and I'm glad you highlight that the two are different). The problem is not that Ireland is too small for competition to work, rather it is the nature of the privatisation that is forced up on us in the name of competition that is the problem. It seems we are following a US-style model which just does not translate to Ireland.

The privatisation of eircom is a prime example. The government facilitated the privatisation so that vested interests and well-connected individuals reaped the rewards. The taxpayer benefited some (it's questionable how much in the long term now that the infrastructure has been compromised) but it's difficult to see how the consumer benefitted (especially given the weakness of the regulator).

It is not privatisation itself that I am opposed to and I am a strong advocate of competition. My concern is that privatisation in itself will not bring all the benefits of competition that are being trumpeted around.

Meanwhile some nice quotes from Michael O'Leary in today's Indo:

Whatever happened to "the customer is always right?"

The problem is, a large percentage of the time, they rarely are.

Lennoxschips

Credit to Michael O'Leary, he's achieved a lot in the industry, but does he have to be such an arse all the time?

BuffyBot

TBH, at least he's honest about things. I'm much more distrustful of those who window-dress their words.

alleepally

Lennoxschips wrote:

Credit to Michael O'Leary, he's achieved a lot in the industry, but does he have to be such an arse all the time?

He's more of a parody of himself now. If he doesn't say something controversial people wonder is he going soft. So basically, he has to keep up the bad guy image whereas his second in command is the good guy.

arcadegame2004

They'd hardly be an attractive option if they were in the 'bail out' position that has been suggested.

Then how come Aer Lingus was able to sell a 25% stake in 2001?

Down in a hole

There's no logic in the proposal to make Aer Lingus a private company.They made a profit last year yet are now suggesting that 1300 people lose their jobs in order to facilitate a move to a more cost effective company,one that will be fashioned upon the fiasco that is Ryanair.There's no need for this government to decide that companies which have been founded by the state need now be dismantled in order to maximise profits whilst the work force suffers.Is the profit motive more important that people's jobs?Should we simply ignore the work people have put into a company simply because the right wing government of ours have decided it prudent to do so?It serves no purpose,the state wishes to make money by selling a company that has done well despite the downturn in the airline industry following 9/11.I'm not a fan of monopolies by any strech of the imaganation but nor do I believe that by simply making every company that has difficulties a private company,reducing the worker's rights and minimising the service they provide to customers.

arcadegame2004

one that will be fashioned upon the fiasco that is Ryanair

How is Ryanair a "fiasco"? For a fiasco it seems to be highly popular with the consumers. They must be doing something right. Just because the bosses of Ryanair are not doormats doesn't mean the workers don't get treated fairly.

By the way, a company floated on the Stock-Exchange, although privatised, is referred to as a plc (public limited company). If it was sold but not floated on the Stock-Exchange, then its a Private-Limited Company. Just clarifying terms there to avoid confusion.

In the long run, an economy with proper competition without endless charity-case state bailouts of failing semi-state companies will be one more conducive to finding jobs.

Look at the unions holding us to ransom again by emptying the ATM's by refusing to deliver the cash. Bertie and Mary should send in the army to drive the trucks if the Marxists wont.

I notice you haven't answered the question I posed that is at the core of my views and those like me:

"If Aer Lingus gets into financial trouble again, how would you turn it around?"

The State is forbidden from injecting capital into state-owned companies in unprofitable times. The last time this problem happened in 2001, part of the solution involved Aer Lingus raising capital through a share issue of about 25%. Large cost-cutting was also involved. However, the unions managed to block important elements of cost-cutting such as the contracting out of catering to the private-sector (obviously needed). I find it hard to believe that in a private-sector Aer Lingus that such changes would not go through.

The consumer has to come first. Business uses airlines and the higher the cost to business of flights to and from the EU, the higher the impact on inflation and that hurts people in their pockets. In the long run a more streamlined Aer Lingus that can give the consumer the lower fares he/she demands, will be far better placed to compete effectively with Ryanair/Easyjet etc.

Market-distorting state-intervention keeps prices artificially high for the consumer. I thought the trade-unions were annoyed about inflation. Why sustain inflation then by opposing the competition needed to reduce it?

Down in a hole

Firstly unions do not hold the country to ransom as you so eloquently put it!The workers in security firms have a dangerous job and one they are not paid overly well for.Now if you are prepared to face the possibility of a shotgun being put in front of you as you go about your daily routine that's all well and good but one cannot expect security guards to face the threat of serious injury or even death without any form of reasonable protection.Moving on I hardly think that our "glorious leader" Mr Ahern is the man to sort out any crisis in the airline industry.His government have been forced to take a more right wing approach to the world of work.The PD's mantra should be "profit yes,worker's rights no".However I digress...There's no need to make Aer Lingus a private limited company,the nightmare that was Eircom is still fresh in the public's mind.Ryanair's service may be cheap but often customers are stranded without any means of securing passage home,it reminds me of third class steerage on the Titanic.Quoting an economist to back up your viewpoint was a reasonably smart move but I choose to turn to a more dramatic and far more interesting character to end this particular post with.

"The cause of labour is the cause of Ireland,the cause of Ireland is the cause of labour"
James Connoly

arcadegame2004

The PD's mantra should be "profit yes,worker's rights no"

So that's why Mary Harney introduced the minimum-wage. :rolleyes:

Lennoxschips

AerLingus made a profit this year, while providing better service than Ryanair and better rights for their workers.

Ryanair provided none of this and contrived to make a loss. Go figure.

I like the curent set up. Let Ryanair do the no-frills side of things and AerLingus can be the state run half-decent airline. That way everybody is happy.

arcadegame2004

Ryanair provided none of this and contrived to make a loss. Go figure.

Wrong. They made a profit of 1.79 Billion. Misinformation from the left is understandible given the illogicity of their economic ideology.

It is grossly irresponsible to take should a short-termist attitude like "this year they made a profit". Bad times will return. They always do in the aviation sector. What will you do then? The State will be forbidden under EU rules from a bailout, and there's only so far you can get on spending-cuts alone.

Aer Lingus needs to be divorced from socialist meddling and left to act in its commercial interest, which inevitably means giving the consumer lower charges so more customers flock to Aer Lingus. Enough of the failed agenda of central-planning with all its high-minded pontifications!

sceptre

arcadegame2004 wrote:

Wrong. They made a profit of 1.79 Billion.

How about you divide that figure by ten (and then change the 9 to a 5). Just for the laugh you understand. Unless you were counting their profit in ten cent pieces (net profit at the last set of annual accounts was 175.5 million (with an 'm')). If Ryanair had made 1.79 billion in profit we'd all have heard about it and everyone would be queuing up to take them over by all means necessary as their shares would be rather dramatically undervalued.

If you're going to start a reply with an authoritative (or authoritarian) "Wrong", try not to get the next sentence arseways, hmmm?

Meanwhile their NP for the last quarter (ended June 30 2004) was 52.6 million euros (that'd be "million" with an 'm') which compares favourably with the corresponding period last year of EUR40.5m. Revenue for this quarter was EUR302.7 million.

I found all this information on the Internet from reputable sources in under thirty seconds and made none of it up.

arcadegame2004

Sorry Sceptre I meant to type 179 million euro but that is still more than double the Aer Lingus figure.

Why are you and others wanting to deprive Aer Lingus of the chance of raising money through share-issues? This right exists for the vast majority of the business-sector (as they are in the private-sector).

sceptre

arcadegame2004 wrote:

Why are you and others wanting to deprive Aer Lingus of the chance of raising money through share-issues?

I haven't posted an opinion on this at all. When I do I'll let you know:) If I become part of the "you and others" group you can include me in the simplistic fingerpointing then.

monument

arcadegame2004 wrote:

Sorry Sceptre I meant to type 179 million euro but that is still more than double the Aer Lingus figure.

Why are you and others wanting to deprive Aer Lingus of the chance of raising money through share-issues? This right exists for the vast majority of the business-sector (as they are in the private-sector).

Why are you obsessed with them making massive amounts of profit, then them providing better service to their flyers, and in their long distance routes, a good public service out of Ireland – which RA are not providing?

Edited: sorry, I actually know why you’re obsessed with them making massive amounts of profit.

Comparing AI to RA is pointless, AI should concentrate on long-distance service, or more clearly break the company into long and short distance carrying - and run each as suited.