Richard Curran: Did we sell Aer Lingus too low?

rivegauche

https://www.independent.ie/business/irish/richard-curran-did-we-sell-aer-lingus-too-low-37220381.html

This question will never go away because there wasn't a proper bidding war for the airline but you can't force parties to bid. Maybe if the primary shareholder wasn't controlled by School Teachers on extended career breaks, etc...
Articles of this type will keep appearing every now then and are wishful thinking in the way people wonder how if Packie Bonner could have just got his fingers to that ball and saved the goal then...

goingnowhere

To be fair its the injection of capital from IAG thats moving things along

4 new A330's in 2 years, another leased, 8-12 A321 NEO LR on order and talk of another 2 A330's in 2019

Then add in lower costs from being able to pool orders, maintenance, handling with IB and BA as well as extra connecting traffic from BA/IB as well as freight

Throw in the fact fuel costs have been stable and low

BA is still dealing with its legacy union issues and has had massive IT issues, add in the fun with the Dreamliners and its not hard for EI to be a star performer

vectorvictor

goingnowhere wrote: »

To be fair its the injection of capital from IAG thats moving things along

4 new A330's in 2 years, another leased, 8-12 A321 NEO LR on order and talk of another 2 A330's in 2019

Then add in lower costs from being able to pool orders, maintenance, handling with IB and BA as well as extra connecting traffic from BA/IB as well as freight

Throw in the fact fuel costs have been stable and low

BA is still dealing with its legacy union issues and has had massive IT issues, add in the fun with the Dreamliners and its not hard for EI to be a star performer

This sums it up for me. We would never have had this level of investment , progress and fast moving development under the previous structure.

EI was ripe for being turned into a flagship performer in any group and in fairness to IAG they are pulling it off well. They did get a bargain IMO but only in the context of being in the minority of companies that could fully exploit it.

Would prefer it in IAGs hands than MOL having his mits near it so I think the outcome was as good as it could have been

A lot of wishful thinking.

What if I’d got 5 more numbers and won the €100m euro millions jackpot.

Nijmegen

He basically sums it up in the article himself:

The answer ... would need to estimate how much of the airline's growth in the last three years would have come without the IAG takeover. Equally, the value of something is the price somebody is willing to pay for it at the time.

For example, even though Aer Lingus had a cash pile in 2015, its profits were declining YoY and I would bet that management would take a considerably more conservative approach to expansion with no safety net behind them. As part of IAG, they were given a strategic mission from new HQ and the security to go for it. If EI expansion didn't go as planned, the new A321s for example could find berths elsewhere in the group. Strategic vision combined with backup possibilities gives you the room to go and make bets.

The price someone pays you is based on the value they think they can create from the asset (or the asset can gain from market conditions) in the following years. If the asset is worth considerably more in time ahead, it's because they succeeded in that.

I also note that all the political hand wringing about IAG buying EI to strip it down have been completely confounded. Don't see much about that.