IAG bids for Aer Lingus

Locker10a

fr336 wrote: »

Got a link please?

I don't unfortunately, I cant remember who posted the photo but it had hundreds of comments from people vowing to never set foot on a plane again, some of the people who claimed they were on the flight (oblivious to the fact there were multiple go around that day @ DUB) told stories of how they tried to get their children to sleep before the plane went down, blabing about near death experiences and such.

fr336

Locker10a wrote: »

I don't unfortunately, I cant remember who posted the photo but it had hundreds of comments from people vowing to never set foot on a plane again, some of the people who claimed they were on the flight (oblivious to the fact there were multiple go around that day @ DUB) told stories of how they tried to get their children to sleep before the plane went down, blabing about near death experiences and such.

*Shudders*

Calina

Locker10a wrote: »

I don't unfortunately, I cant remember who posted the photo but it had hundreds of comments from people vowing to never set foot on a plane again, some of the people who claimed they were on the flight (oblivious to the fact there were multiple go around that day @ DUB) told stories of how they tried to get their children to sleep before the plane went down, blabing about near death experiences and such.

jaysus, I missed all that. Saw the video though. Looked bumpy.

SpaceTime

I'm still confused as to why the Cork slots in particular would be an issue given that the route's very busy compared to other IAG short haul routes and it guarantees a continuous flow passengers to and from other IAG services connecting from Heathrow as they will now have deeply integrated ticketing and routing.

SNN's slots might not be domestically as busy but they could be useful if IAG can use it to push more transatlantic traffic through pre-clearance.

It would seem a bit nuts to just ditch 391,722 ish passengers on the Cork route from LHR and also make an enemy of the Irish Government in the process. Cork's LHR traffic increased in 2012-13 too by 2%

That would actually make Cork - LHR pretty mid-league in terms of BA's domestic routes. It's not by any means a quiet route!

SNN is loading 256,974 / year onto the LHR routes.

Buying Aer Lingus and then 'inverting' where by IAG gets HQ'd in Ireland would probably make tax sense!

bk

I have to agree with you SpaceTime, it wouldn't make any sense to stop Cork to Heathrow. It is a relatively busy and I assume profitable feeder into IAG's Heathrow hub and thus onto their long distance routes.

If they cancelled or reduced the route, it would just lead more people to fly to AMS, CDJ, etc. and thus onto their competitors long haul networks. It would make no sense at all!

They have a pretty strong captive market in Cork feeding into their longhaul network. It would be pretty crazy to give that up!

Specially as they should be able to free up a couple of nice peak time slots out of DUB and BHD by combining IE and BA flights leaving around the same time onto larger widebody jets, thus maintaining capacity and frequency while gaining slots.

Add to that the slots they might be able to free up by funnelling some UK regionals through DUB and SNN, I just don't see there being much pressure on them to free up this slot. And specially not worth it to get the bad press and political pressure it would cause.

I expect they will give guarantees to the Irish government not to mess with Corks Heathrow slots.

I even see opportunity here. We might see a Cork to Dublin route start up to feed their network there.

fr336

Sorry to sound all stupid as usual but is there a strong possibility of seeing larger BA aircraft coming onto the EI network and repainted into EI livery etc so they can have less frequency but fuller planes on certain routes?

Locker10a

fr336 wrote: »

Sorry to sound all stupid as usual but is there a strong possibility of seeing larger BA aircraft coming onto the EI network and repainted into EI livery etc so they can have less frequency but fuller planes on certain routes?

No i doubt that! But I can see BA and EI reducing frequency on say Dublin and Belfast and on their own respective metal and using the A321s to maintain capacity as well as code sharing

fr336

Locker10a wrote: »

No i doubt that! But I can see BA and EI reducing frequency on say Dublin and Belfast and on their own respective metal and using the A321s to maintain capacity as well as code sharing

Ah ok...well with this in mind I reject IAG's new offer :pac:

fr336

Thoughts?

https://twitter.com/JamesMcr90/status/559490940055089154

kub

fr336 wrote: »

Thoughts?

https://twitter.com/JamesMcr90/status/559490940055089154

I am thinking, who is that guy?

fr336

kub wrote: »

I am thinking, who is that guy?

Is it you?

I am interested in the bankruptcy bit because I can't get my head around it.

Locker10a

fr336 wrote: »

Is it you?

I am interested in the bankruptcy bit because I can't get my head around it.

Seems like he hasn't a clue what he's talking about ! Some people are ignorant to the realities of aviation, for example there are people out there who actually believe the PR spin from Michael O'Leary!

SpaceTime

How exactly would IAG force them into bankruptcy ?
Or, why would they do that? It's a purchase for strategic reasons, not some kind of weird vendetta against Aer Lingus ...

Perhaps best to keep Twitter and Boards.ie as separate worlds!

roundymac

If the bid is rejected then this could depress the share value in EI to such a price that it would be more advantagous for the airline to be shut down/broken up. Investers are in this to make money, the best(only) option is for them to accept the IAG offer, no one else is going to come around try and buy it at €2.55 a share plus percentage's. MOL may not be allowed to bid again and even if he was once the market value falls he won't be offering that price. Also that would be the end of the LHR slots if not straight away the certainly in the future.
@ bk, you are assuming that AMS and CDG will still be operating, it could be Beauvais with FR, not a pleasent thought.

LXFlyer

roundymac wrote: »

If the bid is rejected then this could depress the share value in EI to such a price that it would be more advantagous for the airline to be shut down/broken up. Investers are in this to make money, the best(only) option is for them to accept the IAG offer, no one else is going to come around try and buy it at €2.55 a share plus percentage's. MOL may not be allowed to bid again and even if he was once the market value falls he won't be offering that price. Also that would be the end of the LHR slots if not straight away the certainly in the future.
@ bk, you are assuming that AMS and CDG will still be operating, it could be Beauvais with FR, not a pleasent thought.

Why would AMS and CDG not be operating?


What possible reason would there be for removing that connectivity?

Tenger

lxflyer wrote: »

Why would AMS and CDG not be operating?


What possible reason would there be for removing that connectivity?

I guess roundymac is making an assumption that IAG would slash the EI shorthaul routes in order to funnel all connecting traffic through LHR? Or that IAG would grant FR some of the EI network


Read the EI statement earlier, they mention that the bid is dependent on the willingness to sell of Ryanair and the Govt. So no chance of allowing to keep a nominal shareholding then.

roundymac

That's exactly what I'm thinking Tenger, when it comes to big business trust nobody. They want FR and the Gov out of the equation, Fr's precieved enthusiaism at the prospect of the sale make's me very suspisious. They could quite easily go head to head with BA on certain routes making it very uncomfortable for BA. Fr are already after writing down to value of their sharehold in previous a/c's so they don't have to agree to any conditions that BA might try to impose, it's BA that want to buy, FR can play harball and hold tough.
We don't know what BA's intentions are regarding the LHR slot's or even if BA/EI will be allowed to hold onto them. The monopolies board and the EU commision could yet deciede the outcome of this proposed deal.

SpaceTime

fr336 wrote: »

Sorry to sound all stupid as usual but is there a strong possibility of seeing larger BA aircraft coming onto the EI network and repainted into EI livery etc so they can have less frequency but fuller planes on certain routes?

I could see a situation developing where they've a sub-fleet of IAG / neutrally branded aircraft for added flexibility where the BA, Aer Lingus or Iberia fleets need extra capacity to cope with some kind of new routes or bursty traffic e.g. extra flights on a summer route etc.

Some of the alliances do this already.

I honestly don't think you're likely to see EI or BA branded aircraft being swapped around on a normal basis. For marketing reasons, it wouldn't be a good idea, particularly as both airlines are "flag carriers". I can see Irish nationalism getting somewhat offended by a big union jack on the back of an Irish flight and I could see the British being a little weirded out by a BA flight with a big shamrock on the back or a Spanish flag colours.

You don't see IB aircraft operating BA flights for example, I don't really see that it'll be any different with EI and BA.

What would be interesting though is if you could open up more routes via a Shannon pre-clearance stopover.

It could open up a lot more regional US cities to Irish markets.

If you think about it, Ireland's pre-clearance is very handy for UK passengers too. So, you could easily see something like a flight from say Gatwick, LHR or Manchester etc.. land in Shannon, pre-clear, depart as an EI/BA code share to one of the less busy US destinations.

LXFlyer

Tenger wrote: »

I guess roundymac is making an assumption that IAG would slash the EI shorthaul routes in order to funnel all connecting traffic through LHR? Or that IAG would grant FR some of the EI network


Read the EI statement earlier, they mention that the bid is dependent on the willingness to sell of Ryanair and the Govt. So no chance of allowing to keep a nominal shareholding then.

I just do not see that happening as it is a strong business for the airline - why ditch something that actually works?

As I've said several times what I can see is more codeshares utilising Ireland's US pre-clearance facilties:
- BA codeshares on EI transatlantic flights to/from Ireland
- BA codeshares on EI UK feeder services into/out of those transatlantic flights
- BA codeshares on EI European shorthaul services feeding those transatlantic routes

I certainly cannot see EI withdrawing from key routes linking Ireland with Europe - that's the airline's bread and butter market.

At the same time, you'll probably see some consolidation on Dublin-Heathrow and probably Belfast-Heathrow, with larger aircraft being used, thus maintaining overall capacity on the routes.

I very much doubt IAG is going to remove something that clearly works - the Aer Lingus flights out of Cork and Shannon into Heathrow. That really would make no sense whatsoever.

SpaceTime

I agree and I seriously think that the last thing that IAG wants to do is create what could be a very powerful enemy too if it causes loss of connectivity to be an election issue in Ireland.

I know people here are saying it doesn't matter, but at the end of the day the Irish authorities regulate whatever IAG-Aer Lingus operations here and have an extremely powerful voice both in Downing Street and in Brussels.

It would be a rather counterproductive move that could just create a huge headache for IAG and also cost them passengers. It just makes absolutely no sense.

Ryanair on the other hand wanted rid of Aer Lingus basically and were quite prepared to break it up and destroy it and just profiteer on its LHR slots and use it for Ryanair Atlantic by the looks of it.

That would have been an absolutely awful end to EI as it would most likely have completely abolished its entire European operation in favour of FR.

Also, I think getting IAG in from a business connectivity point of view could be very good. BA and IB have a vast route network and are top rated business airlines too. So, it's not all bad at all really.

From IAG's perspective this is a strategic link up, not a hostile take over, break up and merge which is what FR wanted to do.

Also, EI is a full service airline that has adapted to compete with low-frills. It's not really a 'low cost carrier' in the Ryanair sense and never has been. It's a hell of a lot more compatible with IAG than with FR.

Having a business-grade airline connecting Ireland is pretty essential too. We risked completely losing that with FR as they'd have gone for cheap and cheerful (cramped seating, no business services, highlighter yellow interiors etc).

As for Cork Airport - I think the fundamental thing there is that it starts actually marketing itself in a big way and that might mean splitting it off from DAA. It's not really pushing its selling points as a convenient, plush, extremely high quality facility and as Ireland's Southern Gateway.
I think Cork's issues are far more about positioning its brand correctly and creating national awareness. I know people in Tipperary who didn't even know it was anything more than a Sligo-like tiny airport! It spends too much time just talking to Cork. It's actually a huge asset for the whole Southern chunk of Ireland, not just Cork City.
(It's another thread, but I think there's too much obsession about the IAG thing and not enough focus on why the airport's not making the impact it should be. It is a VERY good facility and it's in a very decent location to access a lot of people. It needs to start heavily pushing that!)

intellectual dosser

Could BA not make the profitable Cork/Shannon LHR slots even more profitable using a BA wide body long haul route? I know there are regulations on slot ownership - would they come into play here?

Just trying to understand why removing Cork/Shannon makes no sense to many posters.

SpaceTime

At that rate though you might as well just remove all non-longhaul from Heathrow entirely.

You need feeder routes into a hub or it just becomes London's Long Haul Airport with no onward UK or European connectivity.

Cork is actually well up the ranks of a busy shorthaul LHR European route. It would be mid-way up the UK airports list (in the top 7) if it were classified as a UK domestic route for example.

If that were policy, BA would have scrapped almost all of its UK routes too.

You have to remember that a hub's only a hub because it has vast amounts of connection options.
If LHR started removing European and UK routes, it would rapidly become useless as a hub. It's success is all about connections.
You can basically fly into LHR and get to most of Europe from there. That's why it's so busy. If you just built it on having wide-body flights to other hubs, it would suddenly become far, far less attractive and Frankfurt, Schiphol and CDG would eat into its market rapidly.

BA has always been about the reach of its network - it isn't thinking like Ryanair.

LXFlyer

intellectual dosser wrote: »

Could BA not make the profitable Cork/Shannon LHR slots even more profitable using a BA wide body long haul route? I know there are regulations on slot ownership - would they come into play here?

Just trying to understand why removing Cork/Shannon makes no sense to many posters.

They need feeder routes into the Heathrow long haul services, quite simply.

Heathrow is BA's hub and they put a lot of effort into marketing their long haul services from there in Ireland - I just can't see that changing.

bk

roundymac wrote: »

@ bk, you are assuming that AMS and CDG will still be operating, it could be Beauvais with FR, not a pleasent thought.

You are suggesting IAG would not only cut their Cork - Heathrow routes, but also AMS, CDG, etc.!!!!!

Why would they do that?

KLM, Lufthansa, Air France would be delighted, they would more then likely step in and set up new routes from Cork to their hubs to suck up all those customers.

Why would any airline leave money on the table like that?!!

intellectual dosser

So is there any data publicly available on what % of passengers from Cork/Shannon connect?

Also, does anyone have any thoughts on how the weakening Euro is a factor here? IAG are making a killing in comparison to a similar bid this time last year.

SpaceTime

FR have no options but to dispose of their shareholding in Are Lingus. I suspect they're just holding out for the right price.

They'd a competition authority ruling against them on monopolies grounds. That's not negotiable and they cannot ever purchase Aer Lingus as they'd end up being a near regional monopoly in Ireland.

So, from a business point of view of course they're keen to sell at a good price.

I'd much rather see EI with IAG than having been ripped to bits by FR.

FR's business model doesn't really fit with Aer Lingus at all. They very much do business their way and I'd say merging EI and FR would have been next to impossible due to cultural differences. A highly highly systematised, narrowly focused, standardised, low cost carrier and and old flag carrier? It would have ended up as a total mess!

I honestly think that would have been very bad for both FR and EI.

IAG is basically completely compatible.

Brians Collection

How will Stobart air fair out if this deal was to go through?

SpaceTime

Brians Collection wrote: »

How will Stobart air fair out if this deal was to go through?

Unclear so far, but if it's a profitable arrangement for both parties, I'd say it'd be unlikely to change much, I'd guess.

kona

The amount of people that think aer lingus is a state company is comical. The government own 25.1% not a majority.

Personally I think the whole slot thing is aload of crap if the route is making money it won't be cut. If it's loss making it will. Aer lingus is no longer bound by local political garbage like the Shannon stop over. When it gets rid of Ryanair the shackles are off so to speak and it can perform to it's ability.

Zonda999

SpaceTime wrote: »

At that rate though you might as well just remove all non-longhaul from Heathrow entirely.

You need feeder routes into a hub or it just becomes London's Long Haul Airport with no onward UK or European connectivity.

Cork is actually well up the ranks of a busy shorthaul LHR European route. It would be mid-way up the UK airports list (in the top 7) if it were classified as a UK domestic route for example.

If that were policy, BA would have scrapped almost all of its UK routes too.

You have to remember that a hub's only a hub because it has vast amounts of connection options.
If LHR started removing European and UK routes, it would rapidly become useless as a hub. It's success is all about connections.
You can basically fly into LHR and get to most of Europe from there. That's why it's so busy. If you just built it on having wide-body flights to other hubs, it would suddenly become far, far less attractive and Frankfurt, Schiphol and CDG would eat into its market rapidly.

BA has always been about the reach of its network - it isn't thinking like Ryanair.

Perfectly summed up.

This whole thing about SNN and ORK losing LHR connectivity is really annoying me in this whole debate at the moment, more like the ignorance surrounding this is annoying me to be honest

It almost seems like people half think EI is just providing the LHR links as a service to the people of Ireland and that they're losing money hand over fist on them or something. Maybe, just maybe, EI is providing these links because its makes sense for them to do so, that perhaps there's a viable market being catered for and if they were to pull out from this market, that some one else would willingly step in. It really smacks of a "poor little rural Ireland" attitude about it the whole thing and stems from the same strain of thought that in the 1980's saw the Irish government block Ryanairs early advances for fear of threatening Aer Lingus.

This, more and more just seems like a political decision now rather than one of people who know aviation, and that really sickens me. Maybe its the capitalist in me talking but I don't think politicians should be involved in running a business in an open market like aviation in Europe. Its curtailed Aer Lingus in the past and a pretty quick look over the state of play of aviation in Europe will tell you the tide has turned against state owned and state sponsored airlines in recent times

Long Time Lurker

On a very basic level I simply don't believe we have people in government capable of negotiating any deal regarding this properly. Parish pump politicians with multiple hands temporarily on a very small tiller. Dealings like this are far in excess of the capabilities of narrow minded ex teachers, councilor bribing small town auctioneers / property developers and evidently poor negotiators given the mess all of them have this country in both pre and post bail out. Their track record on semi state sales is diabolical. They're the last eejits Aer Lingus and we can expect to do this properly.

kub

I can just imagine Willie Walsh on his way home from work now and reading this thread.

Breaking his sides laughing and loving us all for having so much interest in his company

Tenger

A statistic that hasn't been mentioned in the emotive response to this bid is how important the Irish market is to BA (who are the major player in IAG)

About 2-3 years ago WW stated that 10% of BA pax were from Ireland.

This takeover bid doesn't have to be predatory, it should also been seen as defensive. If EI are in IAG then IAG get a very strong position in the Irish market and a dominant position in the UK market. IAG get to ensure the maximum amount of Irish travellers connect through LHR, on the flip side BA can utilise EI and DUB as a jumping off point for UK regional traffic to the USA.

This is in addition to any synergies between the groups airlines that can be developed (ie, shuttle services DUB-LHR, codeshare MAD-DUB-USA and/or DUB-MAD-S.America)

I believe that IAG are trying to secure their position, hence the premium price (based on shareprice history)

kub

Will EI be moving into Terminal 5 at Heathrow with BA if this goes through?

Tenger

kub wrote: »

Will EI be moving into Terminal 5 at Heathrow with BA if this goes through?

Well this is getting ahead of ourselves. If we saw IAG consolidate all DUB-LHR-DUB services under the EI brand with BA codeshare (as it was for many years until recently) then I could see it happening for connection convinience. ON the other hand apparently T2 is a lot better for connecting pax than T1 ever was. So may not be a need. I would guess that EI would require 3-4 gates for their own use throughout the day at T5 if it did happen. Maybe more at certain points.

fr336

kub wrote: »

I can just imagine Willie Walsh on his way home from work now and reading this thread.

Breaking his sides laughing and loving us all for having so much interest in his company

Loving us so much he grants us all a ridiculous amount of free shares in the new brilliant EI! :pac:

highlydebased

According to RTE the board is expected to recommend the takeover to the shareholders

Locker10a

highlydebased wrote: »

According to RTE the board is expected to recommend the takeover to the shareholders

RTE also reporting a fear of up to 1000 job losses

markpb

Locker10a wrote: »

RTE also reporting a fear of up to 1000 job losses

Union scare mongering. Yes it's possible but I'm sure they have no more idea what plans are in WWs head than we do.

man98

markpb wrote:

Union scare mongering. Yes it's possible but I'm sure they have no more idea what plans are in WWs head than we do.

But it's been said earlier in the thread that IAG average 10% profit margins and EI makes 5.5%. We'll be seeing frequency reductions and/or price hikes.

Graham

man98 wrote: »

But it's been said earlier in the thread that IAG average 10% profit margins and EI makes 5.5%. We'll be seeing frequency reductions and/or price hikes.

Not necessarily, economies of scale could easily add a couple of points to the profit margins. EI could see additional traffic from the BA/Iberia booking engines, that's probably good for another small bump.

ted1

markpb wrote: »

Union scare mongering. Yes it's possible but I'm sure they have no more idea what plans are in WWs head than we do.

So basically the Union are admitting that Aer Lingus are over staffed and going forward numbers must be cut

ted1

highlydebased wrote: »

According to RTE the board is expected to recommend the takeover to the shareholders

Do turkeys bit for Christmas ?
Each board member would be in for a nice cash payout if they were taking over. I don't think that we should sell the family silver ware. The country doesn't need the money. It would be like given money to a junkie and will be pissef up againest the wall

Graham

ted1 wrote: »

Do turkeys bit for Christmas ?
Each board member would be in for a nice cash payout if they were taking over. I don't think that we should sell the family silver ware. The country doesn't need the money. It would be like given money to a junkie and will be pissef up againest the wall

'The country' has proved for decades that it incapable of running an efficient airline.
'The country' only currently owns a minority of Aer Lingus shares.
'The country' probably could do with the money.
The Junkie comment just didn't make sense.

ted1

Graham wrote: »

'The country' has proved for decades that it incapable of running an efficient airline.
'The country' only currently owns a minority of Aer Lingus shares.
'The country' probably could do with the money.
The Junkie comment just didn't make sense.

The country is the junkie, a junkie blows whatever cash he gets on junk. The country will do the same and in a weeks time we will have no airline and no cash.

Being a minority shareholder, they don't have to run it.

Tenger

intellectual dosser wrote: »

Could BA not make the profitable Cork/Shannon LHR slots even more profitable using a BA wide body long haul route? I know there are regulations on slot ownership - would they come into play here?

Just trying to understand why removing Cork/Shannon makes no sense to many posters.

LHR is a massive worldwide hub. However the BA longhaul operation relies on inbound feed as mch as it does the huge London market. So by IAG removing the EI ORK/SNN-LHR routes it then reduces pax numbers on the BA longhaul operation. IAG want to secure pax traffic,not reduce it. By retaining the LHR routes out of ORK/SNN they make LHR more attractive than driving up to DUB to use Emirates/Ethiad/Turkish etc.

man98 wrote: »

But it's been said earlier in the thread that IAG average 10% profit margins and EI makes 5.5%. We'll be seeing frequency reductions and/or price hikes.

Considering that the 5.5% profit margin that EI had in 2013 was seen as relatively high compared to the industry standard I would be questioning that 10% figure. (Increased fuel costs lowered this figure in 2014,not sure what the full year figure is yet)

Locker10a wrote: »

RTE also reporting a fear of up to 1000 job losses

markpb wrote: »

Union scare mongering. Yes it's possible but I'm sure they have no more idea what plans are in WWs head than we do.

I'm with markpb. This is a worse outcome prediction. SO far we have not seen BA and IB merge backoffice functions so why would we see it at EI? The statement by IAG confirms their intention (at least at the moment) to run EI as a seperate company under the IAG grouping.

ted1 wrote: »

So basically the Union are admitting that Aer Lingus are over staffed and going forward numbers must be cut

Err....No. They are saying that EI have approx 1000 staff in admin/IT/HR functions that could presumably be merged into a joint IAG Admin/HR/IT entity.

Graham

ted1 wrote: »

The country will do the same and in a weeks time we will have no airline and no cash.

Newsflash - we don't have an airline.

WheatenBriar

What's going to happen here is simple.
All BA flights from DUB-LHR will end,with EI taking up the business.
Those BA slots will be used elsewhere.
Our short lived direct flights to T5 will end.
The cheaper ex Dub BA international J fares will end.
Ei will reintroduce a business cabin on the LHR route and join one world.

Graham

WheatenBriar wrote: »

What's going to happen here is simple.
All BA flights from DUB-LHR will end,with EI taking up the business.
Those BA slots will be used elsewhere.
Our short lived direct flights to T5 will end.
The cheaper ex Dub BA international J fares will end.

Iberia flights Madrid to LHR were moved to T5.
BA flights LHR - DUB operate from T5. EI flights operate from T3. Pure guesswork to suggest what would happen post any merger.
International J fares are/were rarely much cheaper ex DUB.

+1 for One World

donvito99

EI will join OW and the Tatl JV with AA, from the release this morning.