Covid-19; Impact on the aviation industry

LawBoy2018

VG31 wrote: »

They're based in Spain actually. It doesn't matter, Aer Lingus is still an Irish company. Swiss and Austrian are part of the Lufthansa Group (a German company) but that didn't stop their respective governments bailing them out.

But why would we bail out a private company in which we have no stake/control? Does 2008 ring any bells? If Aer Lingus went bust, RA would buy it.

LawBoy2018

Kcormahs wrote: »

Lufthansa group is based in Germany and
Swiss, begian and austrian governments contributed to the group, through the companies based in their countries (Swissair, Brussels airlines and austrian airlines respectively)

Aer Lingus has approx. 4500 employees Where 95% are based in Ireland.

Aer Lingus guarantees connectivity to Ireland and supports tourism in big numbers, and without it, all these sectors would be affected.

Iberia got a Spanish bailout through a credit facility even though IAG is “UK” based as you mention

Its not about being IAG, lufthansa group or Air france/KLM

But about the importance of the airline to the country,
To many sectors that are related to it (from tourism, to an post, to connectivity, to cargo)
Its about the Irish People it gives work to. (Should we instead send all these people to the dole? And who would pay for that too?)

Think a bit before making those sort of comments

If the Government are to throw tax payers' money at Aer Lingus, it would need to be for an x amount stake in the company. To do otherwise would be completely reckless and should be challenged by anyone with a brain.

Do you honestly believe that AL's staff are at the forefront of IAG's concerns? Lol.

https://www.rte.ie/news/business/2020/0714/1153300-aer-lingus-staff-reject-proposed-pay-cuts/

https://www.independent.ie/business/irish/aer-lingus-warns-staff-over-social-media-use-39395537.html

Obviously jobs are important, but we're not going to fund a privately owned airline with public monies which may never be viable again, regardless of whether the Government decides to provide some sort of financial aid. Nobody wants to see Aer Lingus wound up, but we can't make the same mistakes we made in the past.

LXFlyer

LawBoy2018 wrote: »

But why would we bail out a private company in which we have no stake/control? Does 2008 ring any bells? If Aer Lingus went bust, RA would buy it.

As with each of the other companies listed above, any state aid would have significant strings attached to it - maintaining key connectivity into/out of Ireland for one.

It certainly would not be a bail out with no conditions.

I also would not be pinning any hopes on Ryanair taking it over.

donkey balls

I've i all ready mentioned what happened in 08 the likes of Anglo should never had got 1€ from the state, The situation the industry is in now is totally different from 08.
By the government giving EI loans it would secure 4500 PAYE workers here, If the government do f**k all and sit on their hands thats a lot of people heading to the local dole office.
Then their be mortgage and car loan defaults more people homeless etc , The government making arrangements for some sort of bail out fund for EI would stop that from happening.
Plus as I mentioned the industry supports jobs not even in the aviation sector, My company supplies Ei and other airlines with services that makes our company a few quid which goes towards paying my salary.

LawBoy2018

donkey balls wrote: »

I've i all ready mentioned what happened in 08 the likes of Anglo should never had got 1€ from the state, The situation the industry is in now is totally different from 08.
By the government giving EI loans it would secure 4500 PAYE workers here, If the government do f**k all and sit on their hands thats a lot of people heading to the local dole office.
Then their be mortgage and car loan defaults more people homeless etc , The government making arrangements for some sort of bail out fund for EI would stop that from happening.
Plus as I mentioned the industry supports jobs not even in the aviation sector, My company supplies Ei and other airlines with services that makes our company a few quid which goes towards paying my salary.

How is it any different, in your opinion? Did the staff of Anglo Irish not pay PAYE? What's to say EI won't be wound up regardless in 12 months? The situation is the exact same, IMO.

LawBoy2018

LXFlyer wrote: »

As with each of the other companies listed above, any state aid would have significant strings attached to it - maintaining key connectivity into/out of Ireland for one.

It certainly would not be a bail out with no conditions.

I also would not be pinning any hopes on Ryanair taking it over.

What if it were to go bust regardless, though? What happens then? At the beginning of the Pandemic, I heard MOL say that RA were keeping an eye out for struggling airlines during an interview with Ivan Yeats on The Hard Shoulder.

Kcormahs

LawBoy2018 wrote: »

How is it any different, in your opinion? Did the staff of Anglo Irish not pay PAYE? What's to say EI won't be wound up regardless in 12 months? The situation is the exact same, IMO.

So let me get this clear, you are saying the Germans, the austrians, the belgians, swiss, french, dutch, portuguese, italians etc are all in the wrong from providing funds to their airlines (Many privately owned too such as The LH group) during this time (even though their airlines were never as profitable as the aer Lingus structure before all the covid), and we should just let aer lingus sink without any support, only because you are against the government supporting this sector?

LawBoy2018

Kcormahs wrote: »

So let me get this clear, you are saying the Germans, the austrians, the belgians, swiss, french, dutch, portuguese, italians etc are all in the wrong from providing funds to their airlines during this time (even though their airlines were never as profitable as the aer Lingus structure before all the covid), and we should just let aer lingus sink without any support, only because you are against the government supporting this sector?

I'm not saying that they were wrong, I'm saying that it wouldn't be in the best interests of Irish taxpayers to fund a private airline in which we have no stake/control. The Government should support the sector via funding for the airports, but not Aer Lingus individually unless it's in return for part-ownership (even as much as 5-10%) of the airline. That would be a different matter entirely.

Kcormahs

LawBoy2018 wrote: »

I'm not saying that they were wrong, I'm saying that it wouldn't be in the best interests of Irish taxpayers to fund a private airline in which we have no stake/control. The Government should support the sector via funding for the airports, but not Aer Lingus individually unless it's in return for part-ownership (even as much as 5-10%) of the airline. That would be a different matter entirely.

I agree with you on taking a part ownership. Unfortunately you can thank FF and FG for the privatisation. Also, with these two in power at the moment, they would rather invest and take 0 stake in the airline, as they were the ones on a rush to sell it for the last decade and a half. You would see Leo dressing as a fairy before admitting it was a mistake to sell Aer Lingus share in 2015 when himself was the transport minister

LXFlyer

LawBoy2018 wrote: »

What if it were to go bust regardless, though? What happens then? At the beginning of the Pandemic, I heard MOL say that RA were keeping an eye out for struggling airlines during an interview with Ivan Yeats on The Hard Shoulder.

That’s a load of “what ifs” that are impossible to answer. I certainly wouldn’t be putting any great reliance on what MOL says in a media interview.

There is no guarantee that Ryanair would be in any better state than Aer Lingus, but right now Aer Lingus it would be fair to say hold sway over a greater number of routes that are essential to the Irish economy.

As to the nature of any State support - well as I said there would be significant strings attached - whether that be control of slots, minimum service levels on key routes, it may have to be capital.

Who knows?

But we are not at that point just yet.

Icepick

MadYaker wrote: »

Are Lingus losing 1.5 million a day according to the IT. Will the government have to do something about that eventually?

They already did the right thing 5 years ago.

LawBoy2018

LXFlyer wrote: »

That’s a load of “what ifs” that are impossible to answer. I certainly wouldn’t be putting any great reliance on what MOL says in a media interview.

There is no guarantee that Ryanair would be in any better state than Aer Lingus, but right now Aer Lingus it would be fair to say hold sway over a greater number of routes that are essential to the Irish economy.

As to the nature of any State support - well as I said there would be significant strings attached - whether that be control of slots, minimum service levels on key routes, it may have to be capital.

Who knows?

But we are not at that point just yet.

What do you mean, impossible to answer? If an investor isn't analysing the viability of a prospective company they're considering investing in, they're in the wrong business. Do you think money just magically falls from the sky?

Capital is the only string that matters and without it, any investment/funding is completely reckless. FG know this, thankfully. This may be one of the few times their obsession with the free market might actually benefit Irish people.

Icepick

Acosta wrote: »

If it wasn't for Ryanair a lot of employees across many different companies working in Irish aviation wouldn't be back at work.

you mean if it wasn't for Ryanair's customers

LawBoy2018

Acosta wrote: »

If it wasn't for Ryanair a lot of employees across many different companies working in Irish aviation wouldn't be back at work.

And why do you think they're back to work? So that Ryanair can avoid refunding passengers for their flights. If the flight operates = no refund.

How can people be so naive?

donkey balls

Did Anglo have 4500 staff approx what other industries did they support where they a vital cog in the supply chain of goods exported/imported into Ireland?
Obviously I would expect the government to have clauses within the loan arrangement if it was to go ahead,
Also EI before the pandemic was one of the top operating companies within IAG group, The industry will pick up again.

LawBoy2018

donkey balls wrote: »

Did Anglo have 4500 staff approx what other industries did they support where they a vital cog in the supply chain of goods exported/imported into Ireland?
Obviously I would expect the government to have clauses within the loan arrangement if it was to go ahead,
Also EI before the pandemic was one of the top operating companies within IAG group, The industry will pick up again.

Obviously they were seen as vital at the time, but hindsight is 2020, which is why the Government haven't bailed out Aer Lingus. IAG are selling off shares to raise capital which should hopefully see them through the pandemic. If not, that's business! Either way, it's not the Irish taxpayers' problem.

LXFlyer

LawBoy2018 wrote: »

What do you mean, impossible to answer? If an investor isn't analysing the viability of a prospective company they're considering investing in, they're in the wrong business. Do you think money just magically falls from the sky?

Capital is the only string that matters and without it, any investment/funding is completely reckless. FG know this, thankfully. This may be one of the few times their obsession with the free market might actually benefit Irish people.

Right now every business is focussing on survival. I really don’t think that acquisitions are coming under the radar, hence my comment about disregarding what O’Leary’s media comments.

I don’t know if EI would go bust regardless of State investment.
No one can answer that. It’s asking for a crystal ball - none of us can tell how this pandemic is going to play out.

And there was no need for the patronising question at the end of the first paragraph. I’m quite aware of how businesses operate, being an accountant.

LawBoy2018

LXFlyer wrote: »

Right now every business is focussing on survival. I really don’t think that acquisitions are coming under the radar, hence my comment about disregarding what O’Leary’s media comments.

I don’t know if EI would go bust regardless of State investment.
No one can answer that. It’s asking for a crystal ball - none of us can tell how this pandemic is going to play out.

And there was no need for the patronising question at the end of the first paragraph. I’m quite aware of how businesses operate, being an accountant.

No offence, but isn't it the accountant's job to read 'the crystal ball' + assess the risk and weigh it against the benefits of financial burdens such as those proposed in this thread? If you were given €1 billion to invest today, would you invest it in Aer Lingus? Unlikely.

Gaoth Laidir

Aer Lingus had opened up a twice-weekly route to Alghero (AHO), Sardinia, from this summer but have cancelled it. We were booked on it and it was ideal.

Ryanair have been flying twice-weekly to Cagliari (CAG) no problem. I was on yesterday's flight and it was around 90% full. I would imagine subsequent flights will be fuller now they Italy is included. Fares were rising by the hour this week after the list was released.

Not sure if Aer Lingus have dropped the ball here as I know that Alghero has always been a very popular route with Irish. I've been coming here for the past 23 years and when Ryanair had the route I was never on any flight that was less than 90% full. The same with the Cagliari route now. I think the numbers are there for Aer Lingus if they want to reconsider (plus it would save me a fortune on car rental from and to Cagliari).

PS. If anyone is coming to Sardinia just be aware that all visitors must register at least 48 hours before arrival. Just Google "Sardegna Sicura" and fill out the form.

LXFlyer

LawBoy2018 wrote: »

No offence, but isn't it the accountant's job to read 'the crystal ball' + assess the risk and weigh it against the benefits of financial burdens such as those proposed in this thread? If you were given €1 billion to invest today, would you invest it in Aer Lingus? Unlikely.

With all due respect, I've not examined the Aer Lingus financial statements, nor am I aware of any investment proposal, other than one that seems to be in your head.

All I've said is that it is perfectly possible, at some point in the future that the government may weigh up the options and decide for strategic reasons to aid Aer Lingus. But we are not at point yet in my view.

Given that they play a major role in air cargo into and out of the State, as well as the connectivity their network provides, I think it is a bit more complicated than you seem to be suggesting.

MoeJay

It's thinking along the lines that this is a conventional downturn that requires conventional solutions that will result in many good businesses inside aviation and well beyond going to the wall.

Only at the state level is the depth of intervention required actually possible. This is not an Irish problem, this is global. We are no different nor do we know any better.

/off topic

The approach taken in 2008-11 only delayed Ireland's recovery further.

/on topic

Investing in Aer Lingus (as an example) in 2020 cannot and should not be compared to previous state investment. They're not even remotely comparable situations.

Cookiemunster

Lads, until EI actually ask the government for support, then it won't be provided. Those European airlines that keep getting mentioned all approached their governments requesting aid. The question should be why have they not approached the government, not why haven't the government bailed them out.

NH2013

LawBoy2018 wrote: »

But why would we bail out a private company in which we have no stake/control? Does 2008 ring any bells? If Aer Lingus went bust, RA would buy it.

Is this the same Ryanair that has availed of £600m bailout in state support from the UK government? All airlines are being bailed out, if none were there would literally be none left at the end of all this.

LawBoy2018 wrote: »

No offence, but isn't it the accountant's job to read 'the crystal ball' + assess the risk and weigh it against the benefits of financial burdens such as those proposed in this thread? If you were given €1 billion to invest today, would you invest it in Aer Lingus? Unlikely.

The question isn’t whether you should invest €1bn in Aer Lingus right now, if people thought that was the case and worth investing they wouldn’t have to ask for help.

The question for the state is if they don’t invest €1bn in Aer Lingus now, will it end up costing the state more in the long run.

Eg, of the 4,500 PAYE employees, living and working in Ireland last year were paid a total of €405m (including employers PRSI) that all went into the Irish economy, so within 2.5 years thy €1bn would have been paid back into the economy, and every year after that a further €405m would be lost directly from the Irish economy just in direct employees alone.

Add in other businesses that supply Aer Lingus, and business dependent on the connections provided by the airline and soon you can see €1bn isn’t a bad investment at all.

LawBoy2018

Cookiemunster wrote: »

Lads, until EI actually ask the government for support, then it won't be provided. Those European airlines that keep getting mentioned all approached their governments requesting aid. The question should be why have they not approached the government, not why haven't the government bailed them out.

https://www.fm104.ie/news/fm104-news/fears-of-aer-lingus-closure-if-government-doesnt-step-in/

Hint hint, nudge nudge...

LawBoy2018

NH2013 wrote: »

Is this the same Ryanair that has availed of £600m bailout in state support from the UK government? All airlines are being bailed out, if none were there would literally be none left at the end of all this.




The question isn’t whether you should invest €1bn in Aer Lingus right now, if people thought that was the case they wouldn’t have to ask for help.

The question for the state is if they don’t invest €1bn in Aer Lingus now, will it end up costing the state more in the long run.

Eg, of the 4,500 PAYE employees, living and working in Ireland last year were paid a total of €405m (including employers PRSI) that all went into the Irish economy, so within 2.5 years thy €1bn would have been paid back into the economy, and every year after that a further €405m would be lost directly from the Irish economy just in direct employees alone.

Add in other businesses that supply Aer Lingus, and business dependent on the connections provided by the airline and soon you can see €1bn isn’t a bad investment at all.

You're being very presumptuous there my friend. How would you know what these people do with their money? You're also presuming that if these employees were to lose their jobs, that they wouldn't simply get gain some other form of employment. Finally, that figure of €405 million is based on the figures from last year, before Aer Lingus staff had their salaries decimated due to the Coronavirus.

€1 billion is a huge amount of taxpayers' money at the best of times, never mind in the wake of a pandemic. It is not our duty to save a privately owned airline from going bust.

If the Government would like to nationalise the airline once again, let them off. However, if they want to pump millions/billions of taxpayers' money into a potentially unviable airline with nothing more than a few measly 'strings' attached, then the 'boom' must be well and truly baq.

Sheep Shagger

LawBoy2018 wrote: »

https://www.fm104.ie/news/fm104-news/fears-of-aer-lingus-closure-if-government-doesnt-step-in/

Hint hint, nudge nudge...

FM104 lifting the Irish Times article...

IngazZagni

Folks Aer Lingus actually have to ask for a bailout before they get one. Private companies would tend to avoid this where possible as having the Government as a shareholder can be a pain in the arse for profit hungry companies. I do think if necessary they should be supported.

However look over in the UK. Virgin begged for a bailout. The Government refused. People thought they would go bankrupt. Turns out they were able to sort it out without tax payer money. This has saved the UK taxpayer hundreds of millions of pounds.

NH2013 wrote: »

Is this the same Ryanair that has availed of £600m bailout in state support from the UK government? All airlines are being bailed out, if none were there would literally be none left at the end of all this.



.

It's a Government backed loan to be paid back with interest, not a bailout. It is available to every UK company (Ryanair Holdings includes Ryanair UK) with an investment grade credit rating. They used it to lift their cash balance to over €4 Billion.

Inquitus

IngazZagni wrote: »

Folks Aer Lingus actually have to ask for a bailout before they get one. Private companies would tend to avoid this where possible as having the Government as a shareholder can be a pain in the arse for profit hungry companies. I do think if necessary they should be supported.

Exactly, that's why Boeing took high interest loans in the US rather than give equity to the US Government.

I would question whether we even need a national carrier at this point, between Ryanair, the Middle Eastern airlines and AA / Delta et al we could have coverage to pretty much anywhere we need to go without Aer Lingus.

Inquitus

Inquitus wrote: »

Exactly, that's why Boeing took high interest loans in the US rather than give equity to the US Government.

I would question whether we even need a national carrier at this point, between Ryanair, the Middle Eastern airlines and AA / Delta et al we could have coverage to pretty much anywhere we need to go without Aer Lingus.

What’s people’s obsession with national carriers ? Aer Lingus isn’t ours and hasn’t been ours in close to 14 years. I bet most people nowadays don’t even know what a national carrier is anymore. Can we set aside discussions of national carriers please, that discussion was so last decade and has been done to death at this point.

There is many ways of looking at giving cash to Aer Lingus at this point. Another one would be that you are simply giving money to a company to burn rather than the company burning up its cash reserves instead. Should we be doing that yet with public money ?

If we did give money to EI I would be asking them to bump staff pay back up to a minimum of 60-70%. A lot of them need that money right now to pay their bills and mortgages. A lot of staff are struggling right now.

Blut2

Deleted User wrote: »

What’s people’s obsession with national carriers ? Aer Lingus isn’t ours and hasn’t been ours in close to 14 years. I bet most people nowadays don’t even know what a national carrier is anymore. Can we set aside discussions of national carriers please, that discussion was so last decade and has been done to death at this point.

There is many ways of looking at giving cash to Aer Lingus at this point. Another one would be that you are simply giving money to a company to burn rather than the company burning up its cash reserves instead. Should we be doing that yet with public money ?

If we did give money to EI I would be asking them to bump staff pay back up to a minimum of 60-70%. A lot of them need that money right now to pay their bills and mortgages. A lot of staff are struggling right now.

"Whats people's obsession with national carriers?" - its the fact they provide key connectivity in times of crisis. Rather relevantly for this topic Aer Lingus flew 259 flights from Dublin-Beijing earlier this year to rapidly supply the state with emergency PPE supplies[1]. The tourism industry, or vital business connectivity, or cargo supply aside (though all are very valuable too), its this sort of emergency air lift capability that is why countries value having national carriers.

Given that, and the fact EI were profitable pre-corona, they should be in a prime position to receive government backing if required. Far ahead of most other industries/businesses.

Though it absolutely shouldn't be a blank cheque - it should be in exchange for equity. EI get the help they deserve, and the Irish tax payer gets something to show for their money.

[1]https://www.thejournal.ie/ppe-final-flight-aer-lingus-covid-19-5134647-Jun2020/