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

Impetus

The proposed sale of Aer Lingus, at any price, could be one of the biggest mistakes an Irish government ever made, including the mismanagement of the banking system over the past ten years.

1. The €1.4 bn offer is derisory. I would put its financial value at around €3.4 billion to Ireland AG.



€ Mil
Cash 600
Property, plant, equipment 600
Goodwill 400
Growth potential in US <>
EUR hub traffic 500
Other assets 100
*Landing slots at LHR 1200
Total asset value 3’400 (€3.4 bn)


I haven't included JFK slots which are being traded at around $17 million per slot pare of late.


2. An iron clad guarantee from IAG not to sell LHR landing slots is not worth the paper it would be written on. Because BA is in the slot buying business at LHR. BA’s share of slots has increased from 36% in 2001 to 50.6% in the summer of 2013. This ignores the slots it owns via IAG’s Iberia subsidiary. BA would just put on fewer flights from Ireland to LHR using larger aircraft, and turn Dublin airport into a British provincial airport like they did at Manchester. Monopoly by the back door.

3. The new reservation system would be structured to transfer traffic during the offpeak daytime from say DUB to CDG to DUB via LHR to CDG. Filling up empty seats on BA and making it impossible to have a quick business meeting for lunch and return and get some work done. Or Vice versa for somebody based in Paris.

4. Direct flights from Cork and Shannon to any place but LHR would face the chop, and there would be fewer flights to LHR on bigger planes to conserve landing slots.

5. Air fares would go up – thanks to the increasing stranglehold of IAG on LHR. Eg BA charge GBP 6’397 for one way first class from London to Beijing. Emirates charge GBP 3’135 for the same journey and class using new A-380 aircraft (BA use 15 year old, technologically out of date, B-777s).

6. BA and LHR are not punctual – partly due to the fact that the airport has only two runways. Lack of punctuality means a higher chance of missed connections. And baggage handling on inter-lined baggage has a very poor chance of delivering ones suitcase on the same flight as you travel on – especially with tight connections. Which could be tight connections caused not by your planning but by aircraft delays. Lufthansa can transfer bags between one flight and another in 45 minutes during a stop-over connection.

7. BA’s fleet is old – lacking creature comforts and reliability.

8. LHR is full of “anti-terrorism” hassle – leading to long lines for passport checks, slow handbaggage security checks, and having to go through a second check at a connecting airport. In contrast we have no passport controls on the continent to bother with, and one security check only for the first flight segment. BA is the flag carrier for a nation that has done a lot of nasty things to other countries over the past five hundred years or so.

9. Ireland is a neutral country and derives benefit from this commitment. BA & co are anything but neutral.

10. The goodwill shown above includes an incalculable value given to a country by its flag carrier – first impressions are lasting. BA and LHR are not good at presenting a positive image of Ireland. In fact it would be impossible for them to even try.

BoJack Horseman

You should post this in the EI/IAG thread in the Aviation forum.

Your post didn't start off well & nosedived when you drifted into "Ireland is a neutral country" guff.

Impetus

BoJack Horseman wrote: »

You should post this in the EI/IAG thread in the Aviation forum.

Your post didn't start off well & nosedived when you drifted into "Ireland is a neutral country" guff.

The forum you refer to appears to be focused on flying and aircraft, and the particpants seem to have little interest in aviation as a key element of national infrastructure.

Ireland may not be 100% neutral, but the Irish army and secret service have never attempted to take over Iraq, for example, with the loss of about 1 million lives. This leads to bad Karma and worse - as in payback missions. And "security hassle" for us travelling public. Notwithstand the fact that after passing through such "security" we can freely buy large quantities of highly inflammable alcohol in glass bottles - ie two weapons in one. But of course we have no reason to use the booze and bottles to do anything terrorising on our flight. No more than the average person would feel motivated to drive into a crowd of people with his car, and mow them down.

Zonda999

Impetus wrote: »

7. BA’s fleet is old – lacking creature comforts and reliability.

What a load of rubbish! Aer Lingus' fleet average age is 9.9 years. BA's is 12.4 years. Hardly a big difference. As well, BA are in the process of replacing their long haul fleet with new aircraft. Aer Lingus have 9 new long haul Airbus A350 on order but Aer Lingus' short haul fleet is ageing now and replacement aircraft will be required to be ordered in the coming years.

It appears to me that much of the opposition to this proposed takeover (Apart from government party backbenchers worried about their seats, and nothing more) comes from a certain "Brits out" mentality toward IAG

Impetus

Zonda999 wrote: »

What a load of rubbish! Aer Lingus' fleet average age is 9.9 years. BA's is 12.4 years. Hardly a big difference. As well, BA are in the process of replacing their long haul fleet with new aircraft. Aer Lingus have 9 new long haul Airbus A350 on order but Aer Lingus' short haul fleet is ageing now and replacement aircraft will be required to be ordered in the coming years.

It appears to me that much of the opposition to this proposed takeover (Apart from government party backbenchers worried about their seats, and nothing more) comes from a certain "Brits out" mentality toward IAG

I have yet to be on a new aircraft on BA. I have often been on a new aircraft on EI. I dont' know where you get your numbers from.

My motivation is not based on "Brits out". It is based on what I feel is in the best long term interest of Ireland as a country, business location and tourist destination.

Zonda999

Impetus wrote: »

I have yet to be on a new aircraft on BA. I have often been on a new aircraft on EI. I dont' know where you get your numbers from.

My motivation is not based on "Brits out". It is based on what I feel is in the best long term interest of Ireland as a country, business location and tourist destination.

I got my information here and here respectively.

British Airways, like most airlines, get new aircraft on a continual basis. This is one of their newest having been delivered to BA on the 16th of October last.By contrast, Aer Lingus' last "new" delivered aircraft was mid 2011. That's irrelevant in any case, modern aircraft are designed for 20 to 30 years of active service.

Impetus

Zonda999 wrote: »

I got my information here and here respectively.

British Airways, like most airlines, get new aircraft on a continual basis. This is one of their newest having been delivered to BA on the 16th of October last.By contrast, Aer Lingus' last "new" delivered aircraft was mid 2011. That's irrelevant in any case, modern aircraft are designed for 20 to 30 years of active service.

I know the life expectancy issue. I have travelled on Concorde (AF and BA) many times. The seating and gadgets were updated, but when one went to the cockpit, it was like travelling back in time. (Ignoring the issues of cramped space, and galleys breaking down, and the impossibility of providing 1cl service to the entire aircraft). Cabin toys are important to me, especially on long journeys. The last time I was on a BA flight they were handing out DVDs to play on your seat's DVR.. And the DVR was broken despite the rip-off 11k air fare.

My basic issue is that BA is developing a growing monopoly of LHR, and they now seem to be talking about turning Dublin into a "third runway" for LHR. This means to me, pressure on landing slots at Dublin, and longer queues for everything, especially for US immigration. Which will make Dublin checks as slow as checks in American airports. Where is the value added please for the Irish citizen, business traveller, tourist etc. Those who spend their money in the Irish economy. Zurich airport is about the same size as Dublin, yet it has four+ runways. It alters the use of runways so that (depending on wind etc), all aircraft taking off use one runway, and all landing aircraft use another. This reduces the gap time between each movement. Every few hours, the use of particular runways ceases in Zurich, so that noise is not a continuous problem for people on flightpaths.

Dublin does not have this luxury of excess runways. Dublin and Ireland needs and demands transportation infrastructure. Allowing BA to use Dublin as LHR RWY3 would be like re-installing the toll barriers on the M50.

In my view the amout offered by BA for EI is irrelevant. The strategic value of Aer Lingus to the country is what counts. It needs a good CEO to replace Christoph Mueller and code sharing with other airline groups, including UAE based airlines.

Godge

Flying into Heathrow has no strategic benefit.

The only reason in the OP that might have any merit is whether IAG are paying enough for Aer Lingus.

If we are getting the right price, we should sell.

kub

This op is the most uninformed poster I have ever come across.
OP I dare you to come over to the aviation forum and chat to us there, we have some threads up on this subject and you very well might learn something.

Impetus

kub wrote: »

This op is the most uninformed poster I have ever come across.
OP I dare you to come over to the aviation forum and chat to us there, we have some threads up on this subject and you very well might learn something.

Been there, done that. My conclusion - their collective heads are suck in the sand.

andrew

Impetus wrote: »

10. The goodwill shown above includes an incalculable value given to a country by its flag carrier – first impressions are lasting. BA and LHR are not good at presenting a positive image of Ireland. In fact it would be impossible for them to even try.

I've never understood this - how do 'flag carriers' add value? Who do they add value to? I get the impression that they only 'add value' for people who are particularly into planes, while nobody else really cares at all.

Impetus

IAG is playing almost a similar game to Digifone, back in the day, when an Irish company had control of large amounts of wireless spectrum in the Irish radio space, for mobile phone use, and sold it to BT and the owners pocketed the proceeds of sale of a national asset - even though they got it de facto free of charge.

http://www.irishtimes.com/business/transport-and-tourism/iag-may-offer-fresh-guarantees-to-secure-aer-lingus-deal-1.2098149

If LHR landing slots are of any use (and they have value as an asset - ie about 1.2 billion EUR), why should Ireland accept a 5 year "guarantee" that Aer Lingus would keep the slots. What happens after 2020? The BA agenda comes into play and these slots would be re-allocated for IAG group use, at the expense of Ireland's air infrastructure.

A similar, but related issue, if one stood at the security line in T2 in Dublin airport, and did a survey of where each passenger lives, you would find an increasing number of them live in the Cork airport catchment area. They often have no choice but to drive etc to DUB to catch a flight. Direct flights from Cork were drastically reduced after the 2008 meltdown in the economy. The numbers travelling are now back to normal, and there has been no re-instatement of direct air services. There is not even a daily direct flight from ORK to Paris anymore.

So effectively what Aer Lingus has been doing to Cork airport will be done to Dublin airport by IAG group within a few years. Passengers to/from Ireland will be increasingly routed via LHR - leading to longer travel times, making single day business trips near impossible to most destinations, and all the other garbage associated with that airport including the fact that the take off waiting time is increasing every year due to the two runway limitation mainly.

There is no concept of public transport planning in Ireland. There is no railway station at Dublin Airport - instead vast sums have been spent on updating 100+ year old stations in the city (eg Heuston and Connolly) - when most other cities in Europe have put large railway stations at airports.

This pig inefficient approach to end to end (ie door to door) public transport has caused and will continue to cause business efficiency problems for Dublin and the rest of the country.

Impetus

andrew wrote: »

I've never understood this - how do 'flag carriers' add value? Who do they add value to? I get the impression that they only 'add value' for people who are particularly into planes, while nobody else really cares at all.

A quick example. I live airlines with clean aircraft - eg Lufthansa, Swiss, and similar. Mueller has got Aer Lingus aircraft to be properly cleaned of late. Almost as clean as Lufthansa.

Any foreigner travelling to IRL for the first time, if he is on an Irish airline will get a feeling for the quality of a society from how clean the aircraft is, and how good the food and service is.

Ryanair fails on cleaning (the inside) and their boring E laced trolley of over-priced junk food is a disgrace. Not to mention the way their staff address the people who are paying their salaries.

BA cannot do this job. They live in a different continent - the continent of the British Isles, whose cultural expectations and values are very different from those found in IRL or mainland Europe.

Anyway this is an aside. If you have an airline for sale that is worth close to 3 billion, and the offer is 1.4 billion. No thanks on the financial front.

Godge

Impetus wrote: »

IAG is playing almost a similar game to Digifone, back in the day, when an Irish company had control of large amounts of wireless spectrum in the Irish radio space, for mobile phone use, and sold it to BT and the owners pocketed the proceeds of sale of a national asset - even though they got it de facto free of charge.

http://www.irishtimes.com/business/transport-and-tourism/iag-may-offer-fresh-guarantees-to-secure-aer-lingus-deal-1.2098149

If LHR landing slots are of any use (and they have value as an asset - ie about 1.2 billion EUR), why should Ireland accept a 5 year "guarantee" that Aer Lingus would keep the slots. What happens after 2020? The BA agenda comes into play and these slots would be re-allocated for IAG group use, at the expense of Ireland's air infrastructure.

A similar, but related issue, if one stood at the security line in T2 in Dublin airport, and did a survey of where each passenger lives, you would find an increasing number of them live in the Cork airport catchment area. They often have no choice but to drive etc to DUB to catch a flight. Direct flights from Cork were drastically reduced after the 2008 meltdown in the economy. The numbers travelling are now back to normal, and there has been no re-instatement of direct air services. There is not even a daily direct flight from ORK to Paris anymore.

So effectively what Aer Lingus has been doing to Cork airport will be done to Dublin airport by IAG group within a few years. Passengers to/from Ireland will be increasingly routed via LHR - leading to longer travel times, making single day business trips near impossible to most destinations, and all the other garbage associated with that airport including the fact that the take off waiting time is increasing every year due to the two runway limitation mainly.

There is no concept of public transport planning in Ireland. There is no railway station at Dublin Airport - instead vast sums have been spent on updating 100+ year old stations in the city (eg Heuston and Connolly) - when most other cities in Europe have put large railway stations at airports.

This pig inefficient approach to end to end (ie door to door) public transport has caused and will continue to cause business efficiency problems for Dublin and the rest of the country.

Which is it?

Will Heathrow landing slots be re-allocated to other parts of IAG or will Irish passengers be flying through Heathrow more often? You make both statements in your post which makes no sense at all.

As for Heathrow, I haven't gone through Heathrow in years, have used Gatwick, Manchester, Copenhagen, Paris and Frankfurt over the last 20 years in preference to Heathrow for connections. In future, Middle Eastern hubs will be at least as important.

When travelling to London, it is Gatwick or Stansted as they are easier airports to get in or out of.

Impetus

Godge wrote: »

Which is it?

Will Heathrow landing slots be re-allocated to other parts of IAG or will Irish passengers be flying through Heathrow more often? You make both statements in your post which makes no sense at all.

Both. They will use larger aircraft to carry more people in each slot. This will mean less frequent connections from IE to LHR. Not to mind baggage connecting problems will escalate, and an aircraft with 300 or 400 people on seats, arriving late will have more impact on connection performance.

This is how the UAE based airlines have turned Dubai and Abu Dhabi into additional runway space for LHR etc. The A-380 is certified for 853 passengers onboard. Emirates A-380s have 644 seats.

Dubai is the largest airport in the world (about the same at Atlanta) with over 70 million PAX. It achieves this comfortably because most of the aircraft arrriving and departing are large.

Impetus

Godge wrote: »

Flying into Heathrow has no strategic benefit.

I totally agree, unless you are visiting an address in west London or TW, RG or SL. Stragetic benefit llies in having at least two flights a day direct from your local airport to as many airports as possible.

And by having others connect via your airport. Over 10 years ago I created a synergy on a high traffic website between JetBlu and Aer Lingus - pointing out the benefits to Americans of flying to the rest of Europe via IRL. It took at least five years of bumbs on seats following this suggestion on this site to get the then management of Aer Lingus to do something about it.

The origin of seamless travel movements also matters. ie having national railway stations at airports, and trains and trams and buses that feed traffic to that rail network. The idiots who "manage" Dublin airport have no systematic bus station signage (eg electronic signage with destination names, but stop number, time of next service, and delay information (eg +10min)). They can't even clearly sign where to go for an airport shuttle bus for the hotel you have reserved.

While one can think of worse off places in Africa and places south, Ireland takes the gold cup for confused, needlessly complicated thinking in my books.

realitykeeper

When Aer Lingus was privatized, the employees should not have been given shares in the company because they did not deserve them. The government should have sold its stake years ago

Geuze

Impetus wrote: »

A quick example. I live airlines with clean aircraft - eg Lufthansa, Swiss, and similar. Mueller has got Aer Lingus aircraft to be properly cleaned of late. Almost as clean as Lufthansa.

Any foreigner travelling to IRL for the first time, if he is on an Irish airline will get a feeling for the quality of a society from how clean the aircraft is, and how good the food and service is.

Ryanair fails on cleaning (the inside) and their boring E laced trolley of over-priced junk food is a disgrace. Not to mention the way their staff address the people who are paying their salaries.

.

I have travelled on AL and FR dozens of times.

I have never considered or thought about "how clean" the plane is. They all seem clean to me.

The pax leave rubbish behind, but that is a reflection of people, not the airline.

Impetus

Geuze wrote: »

I have travelled on AL and FR dozens of times.

I have never considered or thought about "how clean" the plane is. They all seem clean to me.

The pax leave rubbish behind, but that is a reflection of people, not the airline.

Well anyone used to travelling on Swiss or Lufthansa (or Singapore or Emirates) or any other clean cabin airline, will notice the difference. Certainly when one compares Ryanair cabins with other airlines.

Everything is relative in life.

If people leave rubbish behind, it should be removed before the next flight boards.

Impetus

It does not matter to the IAG offer if a 5 or 10 or 20 year veto is given to the ie.Government over Aer Lingus slot re-use within IAG. The time is irrelevant. The day will come when that a veto will run out.

If one looks at the other Aer Lingus assets – cash, aircraft, goodwill, fictional runway capacity for LHR at DUB, less whatever staff and related costs and issues remain, these are hardly sexy net assets for BA & Co to own. Willy Walsh won’t be in his job forever either.

The company (BA) has already bought its way from holding 36% to over 50% of LHR slot pairs since 2001 – through acquisitions. “Lack of slots” is a major limiting factor to the growth of its business, and the price it can extract from each passenger. Including Aer Lingus passengers of the future. Every slot BA does not own, means Emirates or another competitor can’t snatch 600 or so of BA’s customers a day on an A-380 or other large aircraft, and give them value for money, in new aircraft, with pleasant rather than grumpy service and good food.

A take-off slot, used to carry a widebody aircraft of people travelling a long distance, is far more financially important, than one wasted on an Ireland-LHR movement. The lack of interest by British and EU competition regulators in the proposed transaction (or any transaction involving BA buying of LHR capacity) is alarming in its implications. One wonders who is calling the shots on the competition regulation “authorities”?

Then there is the GBEXIT risk if that country decides to leave the EU in a few years’ time. Depending on the share capital holding position at that point, BA might cease to be 50% EU owned, and so would Aer Lingus. Yes another aspect of the mess an IAG takeover of EI would create.

Aer Lingus would be better off creating / participating in an investment group / code sharing brand made up of smaller airlines and offering its Atlantic advantages and location in Europe to the group. There is no shortage of airlines with loyal customers who do not have a transatlantic platform. In the rest of Europe, Middle East and Asia.

Godge

Impetus wrote: »

It does not matter to the IAG offer if a 5 or 10 or 20 year veto is given to the ie.Government over Aer Lingus slot re-use within IAG. The time is irrelevant. The day will come when that a veto will run out.

You are assuming that the Heathrow slots will be as important in 5 or 10 or 20 years time, or that flights to Heathrow from Cork will be relevant. The attachment to the slots in Heathrow mystifies me.

Impetus wrote: »

If one looks at the other Aer Lingus assets – cash, aircraft, goodwill, fictional runway capacity for LHR at DUB, less whatever staff and related costs and issues remain, these are hardly sexy net assets for BA & Co to own. Willy Walsh won’t be in his job forever either.

The company (BA) has already bought its way from holding 36% to over 50% of LHR slot pairs since 2001 – through acquisitions. “Lack of slots” is a major limiting factor to the growth of its business, and the price it can extract from each passenger. Including Aer Lingus passengers of the future. Every slot BA does not own, means Emirates or another competitor can’t snatch 600 or so of BA’s customers a day on an A-380 or other large aircraft, and give them value for money, in new aircraft, with pleasant rather than grumpy service and good food.

A take-off slot, used to carry a widebody aircraft of people travelling a long distance, is far more financially important, than one wasted on an Ireland-LHR movement. The lack of interest by British and EU competition regulators in the proposed transaction (or any transaction involving BA buying of LHR capacity) is alarming in its implications. One wonders who is calling the shots on the competition regulation “authorities”?.

Heathrow carries a premium at the moment, that is why the slots are of interest. However, that also means that flights into Heathrow are dearer.

No matter your destination from Dublin, there are better, faster and cheaper ways to fly than through Heathrow. People are paying a price for Heathrow that is not justified.

Impetus wrote: »

Then there is the GBEXIT risk if that country decides to leave the EU in a few years’ time. Depending on the share capital holding position at that point, BA might cease to be 50% EU owned, and so would Aer Lingus. Yes another aspect of the mess an IAG takeover of EI would create.

Aer Lingus would be better off creating / participating in an investment group / code sharing brand made up of smaller airlines and offering its Atlantic advantages and location in Europe to the group. There is no shortage of airlines with loyal customers who do not have a transatlantic platform. In the rest of Europe, Middle East and Asia.

Aer Lingus should have done that years ago. However, the opportunity was lost because we held on to the Shannon stopover rule for too long. This meant we lost first-mover advantage. We are making the same mistake now in our attachment to the Heathrow slots.

The debate has moved on beyond having a national airline. You don't need a national airline to have access to airlines and passengers. You need decent infrastructure on the ground, quick turnaround facilities, innovative landing charges etc. and the airlines will come.

Impetus

Godge wrote: »

You are assuming that the Heathrow slots will be as important in 5 or 10 or 20 years time, or that flights to Heathrow from Cork will be relevant. The attachment to the slots in Heathrow mystifies me.

I haven't been to Heathrow airport for perhaps 15 years. You are preaching to the converted to some extent. But I put a value on those slots, which is escalating - they are a far better investment than say gold or the S&P 500 or the DAX. Or Irish government debt. Ireland does not need this money. So why risk losing control over it?

Godge wrote: »

Heathrow carries a premium at the moment, that is why the slots are of interest. However, that also means that flights into Heathrow are dearer.

No matter your destination from Dublin, there are better, faster and cheaper ways to fly than through Heathrow. People are paying a price for Heathrow that is not justified.

Or from anywhere else.

Godge wrote: »

Aer Lingus should have done that years ago. However, the opportunity was lost because we held on to the Shannon stopover rule for too long. This meant we lost first-mover advantage. We are making the same mistake now in our attachment to the Heathrow slots.

There was nothing lost for the state in the "Shannon stopover" change. Shannon still has flights to N. America. So does Dublin.

My main concern for all airports is that BA will remove a lot of direct flights at various times of the day from all Irish airports, and force people to change planes at Heathrow to fill their un-sold seats. Those unsold seats are free to BA. Any airline operating directly out of Ireland has to fund a flight to provide a service. This threatens marginalising some direct services.

You won't get Londoners to fly to Dublin to connect with an Aer Lingus flight to Frankfurt. Willie Walsh's game is a one way street, going in the wrong direction as far as Ireland is concerned. And Dublin airport's runway capacity has little to spare in terms of new movements.

Farmer Pudsey

You have to question whether Aer Lingus is viable as a stand alone entity. IMO it is too small to survive by itself. Being small it is unliky it can exoand to be viable. The question you then have to ask is who is the best longterm partner ( another name for a buyer) for AL.

Ryanair was unsuitable as it is a main competitor on the Dublin London route. If AL runs into trouble down the line as air traffic is cyclic it cannot receive state aid. So where will that leave it we could use Waterford Glass as an example. IAG looks like the only game in town.

Impetus

Farmer Pudsey wrote: »

You have to question whether Aer Lingus is viable as a stand alone entity. IMO it is too small to survive by itself. Being small it is unliky it can exoand to be viable. The question you then have to ask is who is the best longterm partner ( another name for a buyer) for AL.

Ryanair was unsuitable as it is a main competitor on the Dublin London route. If AL runs into trouble down the line as air traffic is cyclic it cannot receive state aid. So where will that leave it we could use Waterford Glass as an example. IAG looks like the only game in town.

Aer Lingus made about 180 million EUR in profit while the country was falling apart financially post 2008. Anyway as I stated earlier in this thread, there are lots of options for Aer Lingus to link up with other airlines to exploit Aer Lingus's European network (eg Asian and American based airlines - providing distribution for their passengers within Europe and extending the JetBlu type arrangements to other carriers in North America).

Iberia, the other IAG national airline was bankrupt and had appalling staff costs/relations, etc.

There is no reason why Aer Lingus can't align with the up and coming airlines of the world, and provide them with European "last 1000km" connections to the rest of Europe. This would increase load factors allowing more flights per day from Ireland. Ireland is well positioned in terms of access to North America and over the North Pole routes from Asia.

Ireland has become a major base for airline services, leasing, and related services. One of the few industries that the country dominates the market in many sectors.

The issues of not being part of a big airline alliance are in my view anti-competitive issues that need EU competition commissioner examination. All the airlines (aside from Ryanair AFAICS) use sita.aero to interconnect on a standardized basis. eg Aer Lingus is not in Flying Blue (Air France/KLM). If I want to connect with an Air France flight at CDG, having arrived at CDG on Aer Lingus - this involves a 10 min free train ride on Roissy Val, to T2E, T2F or T2G from T1.

If I arrived from Ireland on "Air France", I would already have arrived in the T2E, T2F or T2G system. There are no Priority Pass Lounges in these T2* terminals. So to use a lounge I have to purchase a 1cl or business class ticket. Swiss take Priority Pass cards in Zurich Airport. How come Air France / ADP can get away with banning independent lounge cards for their airports? The same problem arise at Munich T2 - but the airport has so much to do and such good food (unlike Charles de Gaulle over-priced junk), one doesn't need a lounge.

So basically these airline alliiances are in my view anti-competitive in many respects and need to be investigated by the dozy EU competition commissioner.

SITA.aero provides all the lubrication needed for airlines to work together, without creating two or three monopolies in Europe.

Farmer Pudsey

Impetus wrote: »

Aer Lingus made about 180 million EUR in profit while the country was falling apart financially post 2008. Anyway as I stated earlier in this thread, there are lots of options for Aer Lingus to link up with other airlines to exploit Aer Lingus's European network (eg Asian and American based airlines - providing distribution for their passengers within Europe and extending the JetBlu type arrangements to other carriers in North America).

Iberia, the other IAG national airline was bankrupt and had appalling staff costs/relations, etc.

There is no reason why Aer Lingus can't align with the up and coming airlines of the world, and provide them with European "last 1000km" connections to the rest of Europe. This would increase load factors allowing more flights per day from Ireland. Ireland is well positioned in terms of access to North America and over the North Pole routes from Asia.

Ireland has become a major base for airline services, leasing, and related services. One of the few industries that the country dominates the market in many sectors.

The issues of not being part of a big airline alliance are in my view anti-competitive issues that need EU competition commissioner examination. All the airlines (aside from Ryanair AFAICS) use sita.aero to interconnect on a standardized basis. eg Aer Lingus is not in Flying Blue (Air France/KLM). If I want to connect with an Air France flight at CDG, having arrived at CDG on Aer Lingus - this involves a 10 min free train ride on Roissy Val, to T2E, T2F or T2G from T1.

If I arrived from Ireland on "Air France", I would already have arrived in the T2E, T2F or T2G system. There are no Priority Pass Lounges in these T2* terminals. So to use a lounge I have to purchase a 1cl or business class ticket. Swiss take Priority Pass cards in Zurich Airport. How come Air France / ADP can get away with banning independent lounge cards for their airports? The same problem arise at Munich T2 - but the airport has so much to do and such good food (unlike Charles de Gaulle over-priced junk), one doesn't need a lounge.

So basically these airline alliiances are in my view anti-competitive in many respects and need to be investigated by the dozy EU competition commissioner.

SITA.aero provides all the lubrication needed for airlines to work together, without creating two or three monopolies in Europe.

Basically all a load of rubbish. You are try to show off you knowledge of airline industry with out answering the question I asked or rebutting the points I made. it is harder and harder for small airlines to survive and grow.

In reality IAG could buy a majority holding in AL and then using it badge realign its Heathrow slots to service Europe using AL as a IAG badge. However that dose not seem to be there plan they are willing to give gaurantees re slots and seem to want to use DA as a hub to the US.

It is all very well to talk about alliances when in reality most customers want to but one ticket off one airline to take them from Dublin to Melbourne and from Athens to San Francisco.

Priority pass lounges are immaterial. Most consumers shop with there hand firmly on there wallets it is hard for alliances to compete against large scale operators. AL is competing with RA head to head from Ireland accross Europe there will be no amazing profits to develop and expand.

My other point that you have shyed away from is what happens 3-4 years down the line if AL needs to raise funds will investors be willing to pony up if they see that return on investment will be limited due to government holding.In reality if it is not IAG now it will be Emirates or someone else after the next election but the fit and plan may not be as tantilizing

elastico

Impetus wrote: »

The proposed sale of Aer Lingus, at any price, could be one of the biggest mistakes an Irish government ever made,

The Irish Government already sold Aer Linguse years ago, they are but a minor shareholder now. The share price reflects its value so €1.4M was generous, €3.4M is ridiculous.

Couldn't be bothered with the reading the rest of it after that start.

The only reason they won't sell is GENERAL ELECTION LOOMING.

It will be sold 1st year of new government.

Impetus

elastico wrote: »

The Irish Government already sold Aer Linguse years ago, they are but a minor shareholder now. The share price reflects its value so €1.4M was generous, €3.4M is ridiculous.

Couldn't be bothered with the reading the rest of it after that start.

The only reason they won't sell is GENERAL ELECTION LOOMING.

It will be sold 1st year of new government.

I beg to differ. The value of Aer Lingus is partly a function of the market price of landing slots at LHR. In the same way as the value of Digifone was largely a function of the wireless spectrum it had possession of, free of charge.

I am a qualified accountant, and I can assure you that a value in excess of EUR 3 billion is a fair value for Aer Lingus. The Irish Government would not get this - it would obviously accrue to each shareholder based on the number of shares held.

If price per share is your sole criteria for the Irish Government selling its 25%+ holding in the company, perhaps they should be selling Irish passports to Russian and other billionaires who perhaps got their money in less than legal ways, for €100 million per passport?

It is another form of debt legacy to younger generations into the future. Pawn shop governance.

Farmer Pudsey

Impetus wrote: »

I beg to differ. The value of Aer Lingus is partly a function of the market price of landing slots at LHR. In the same way as the value of Digifone was largely a function of the wireless spectrum it had possession of, free of charge.

I am a qualified accountant, and I can assure you that a value in excess of EUR 3 billion is a fair value for Aer Lingus. The Irish Government would not get this - it would obviously accrue to each shareholder based on the number of shares held.

If price per share is your sole criteria for the Irish Government selling its 25%+ holding in the company, perhaps they should be selling Irish passports to Russian and other billionaires who perhaps got their money in less than legal ways, for €100 million per passport?

It is another form of debt legacy to younger generations into the future. Pawn shop governance.

Another load of bull. Airlines like utility company's in general are worth more in pieces than in the whole. Slots are worth more because of non availibility. If all Aer Lingus slots were sold in one whack they might be lucky to fetch half the per double slot price. The reason that airlines are worth less than there piece value is because of fleet replacement and because of the cyclic nature of the airline business where profits of 200 million could be turned into a loss of 300 million plus in one year. Utilities are often similarly under valued if you sold off there assets piece meal. For instance eircom is worth about 1.2-1.5 million with out any debt attached, however the value of the copper in its cables are worth most of that and all the property it owns is similar. Coilte would be similar worth way more than it face value as would board na Mona.

Like many accountants you know the price of everything and the value of nothing. Accountants in general make mad business people and poor manager CEO's.

Like a lot of

elastico

Farmer Pudsey wrote: »

Another load of bull. Airlines like utility company's in general are worth more in pieces than in the whole. Slots are worth more because of non availibility. If all Aer Lingus slots were sold in one whack they might be lucky to fetch half the per double slot price. The reason that airlines are worth less than there piece value is because of fleet replacement and because of the cyclic nature of the airline business where profits of 200 million could be turned into a loss of 300 million plus in one year. Utilities are often similarly under valued if you sold off there assets piece meal. For instance eircom is worth about 1.2-1.5 million with out any debt attached, however the value of the copper in its cables are worth most of that and all the property it owns is similar. Coilte would be similar worth way more than it face value as would board na Mona.

Like many accountants you know the price of everything and the value of nothing. Accountants in general make mad business people and poor manager CEO's.

Like a lot of

LOL, I think its more than his accounting skills that are lacking!

Having now read reason 8 about anti terror hassle in Heathrow in a later post he shares with us that he hasn't been in Heathrow in 15 years so clearly is only making up his reasons not to sell as he goes along so he can come with 10.

Impetus

Farmer Pudsey wrote: »

Another load of bull. Airlines like utility company's in general are worth more in pieces than in the whole. Slots are worth more because of non availibility. If all Aer Lingus slots were sold in one whack they might be lucky to fetch half the per double slot price. The reason that airlines are worth less than there piece value is because of fleet replacement and because of the cyclic nature of the airline business where profits of 200 million could be turned into a loss of 300 million plus in one year. Utilities are often similarly under valued if you sold off there assets piece meal. For instance eircom is worth about 1.2-1.5 million with out any debt attached, however the value of the copper in its cables are worth most of that and all the property it owns is similar. Coilte would be similar worth way more than it face value as would board na Mona.

Like many accountants you know the price of everything and the value of nothing. Accountants in general make mad business people and poor manager CEO's.

Like a lot of

The value of an airline or any other company depends on the market that its assets are being sold into. If I was advising somebody buying Aer Lingus as an airline, based on its earnings ability, I would not suggest a value of €3.5 billion or anything like that. However, if I was advising somebody who was interested in one element of the business for the purchaser’s needs, I would look at the value of that element in terms of recent market transactions for that class of asset, and have that as my starting point. Other assets – like the €600 million or so in cash and cash equivalents are easy to put a value on. As is a fleet of aircraft – (especially given the long waiting times for Airbus kit in particular), average age about 9 years. That has a liquidation value. Slots would have to be marketed, like one would sell a valuable chain of hotels perhaps.

In this case, IAG is in the slot buying business. If a liquidator was appointed to EI, I suspect BA would only be interested in the LHR slots. Maybe an aircraft or two ? But cash is cash. And aircraft are aircraft. And you have a brand name that has been around for 50 odd years. Somebody seeing the void from a liquidation of Aer Lingus would likely be interested in buying the Aer Lingus brand name, and some other assets. The business could be re-configured to exploit the goodwill, as a new Aer Lingus. Everything has value.

Speaking of bull, as an aside, Mr Farmer, the only farmer I can think of with a welly in the aviation business is Michael O’L.

Impetus

elastico wrote: »

LOL, I think its more than his accounting skills that are lacking!

Having now read reason 8 about anti terror hassle in Heathrow in a later post he shares with us that he hasn't been in Heathrow in 15 years so clearly is only making up his reasons not to sell as he goes along so he can come with 10.

Watch: https://www.youtube.com/watch?v=1g01oGlnSkg

https://www.youtube.com/watch?v=ZOjnntYmK6Q

https://www.youtube.com/watch?v=P137s1F41jA

https://www.youtube.com/watch?v=5Nn9Ya-CeqI

The Tube is full of Heathrow problems, not without reason. No smoke without fire etc.

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