Ryanair does not buy or fly Airbus planes, but...
...it has just made a €1.4 billion takeover bid for a national airline that operates nothing but Airbus aircraft for its short-haul flights!
This morning's announcement that the budget airline was planning to buy the Irish national carrier Aer Lingus had Europe's airline bosses gagging on their toast. The brazenness of the approach was expressed by Ryanair's Deputy Chief Executive Michael Cawley when he told Reuters: "We would expect to have some input at board level but not to be distracted from running our own business which is the larger and more profitable of the two businesses." In other words, we're the pilots here.
Ryanair's move is tactically brilliant as it places the bumbling Irish government, which holds 28.3 percent of the Aer Lingus stock, in the awkward position of attempting somehow to thwart market forces, which have enriched Ireland beyond belief in the past decade, or appealing to Brussels to do the dirty work of somehow saving Aer Lingus from the homegrown predator. Either way, Ryanair boss Michael O'Leary has snookered the Irish Prime Minister Bertie Ahern, and at a time when the latter has his back to the wall as the corruption charges mount. As soon as O'Leary has 51 percent of Aer Lingus, he won't care. All he'll want then is a return on his investment. Which is something that the heavily unionized Aer Lingus staff, who own 9.85 percent of the shares (now worth €200 million), will need to ponder. Ryanair, after all, is a non-union airline.
It's also a non-Airbus airline. As of May, the Ryanair fleet consisted of 111 Boeing 737-800 aircraft. The company has orders for an additional 230 Boeing 737-800s by 2010, with options on a further 193. Ryanair expects to have a total fleet of 249 Boeing 737-800 by 2012 and still holds options on 169 aircraft for delivery between 2008 and 2014. Maybe Aer Lingus was factored into this planning? Finally, some of the sayings of Michael O'Leary, the man who has brought Ryanair to where it is today:
* On refunds: "What part of no-refund do you not understand? You are not getting a refund so fuck off."
* On the Polish market: "Who wants to go to Gdan'sk? There ain't a lot there after you've seen the shipyard wall."
* On Lufthansa: "Jurgen (Weber Chairman Lufthansa Supervisory Board) says Germans don't like low fares. How the fuck does he know? The Germans will crawl bollock-naked over broken glass to get them."
* On air travel: "For years flying has been the preserve of rich fuckers. Now everyone can afford to fly."
* On travel agents: "Screw the travel agents. Take the fuckers out and shoot them. What have they done for passengers over the years?"
* On rivalry with British Airways: "There's too much 'we really admire our competitors'. All bollocks. Everyone wants to kick the shit out of everyone else. We want to beat the crap out of BA. They mean to kick the crap out of us."
* On the Irish: "They don't call us the fighting Irish for nothing. We have always been the travel innovators of Europe. We've built the roads and laid the railways. Now it's the airlines!"
Comments
Aer Lingus was a successful public service, doing what the people of Ireland needed of it. It was under the control of the state and had a legal obligation to serve the people's needs. It was crazy for the government to believe that we could improve on that by putting it under the control of others and giving it a legal obligation to serve their needs? Floating Aer Lingus was a disaster. The government traded an important public asset for a marginal increase in wealth for the already wealthy.
Posted by: frequent flyer | October 5, 2006 7:14 PM
Uhhh, what strong language. Good Eamonn, that YOU don´t talk like that...
Posted by: Xtian | October 5, 2006 7:20 PM
So, Michael O’Leary has purchased 16% of Aer Lingus and put in a bid for controlling stake. He's paying 27% above the floatation price, too. So those lucky investors who got into Aer Lingus have made 27% on their money in a little over a fortnight. What did Aer Lingus do during those two weeks to make its value soar? Nothing. Looks to me like the Irish people had their airline sold off at a price far lower than its real value. And now it's gone for ever.
Posted by: Joe O'Neill | October 5, 2006 7:29 PM
This is a very Irish story. Take the role of the government. It has kept a quarter of the stock. I mean, you either sell something or you keep it. With this minority shareholding in Aer Lingus, the amount of shares that could have been sold was considerably reduced, which led to a related loss of income from the offering. As well, by retaining an influence on the board of directors, it makes the airline less appealing to investors who would, rightly, worry about "government interference". After all, Ireland might have a Sinn Fein government five years from now and investors might not fancy doing business with killers and drug dealers.
Posted by: hanna barry | October 5, 2006 7:37 PM
Sell! Sell! Sell! Spend some time in Ireland and you'll see what a joke state-run public services are. Are Lingus is just a job clubs for its employees. The customers are treated like shit. All state monopolies screw the tax payer and what do we get? Bad service, inefficiency, corruption and rip-off prices. Take a trip on Irish Rail or Bus Eireann. A nightmare! Sell 'em all and let the private sector deliver the services we need.
Posted by: MAD MAX | October 5, 2006 8:01 PM
Aer Lingus was not a successful public service, for most of it's history it was a financial and service monopolized disaster. Not only that but it was proped up by Irish taxes. It only got it's shit together when it realised it was going to go public and needed to be worthwhile financial proposition. I can understand newly minted countries creating goverment run airlines as a matter of prestige, but in this day an age with all our travel options what good can ever come out of a government run airline. Governments should not be in the travel business, they are crap at it. In almost every instance private firms do a better job with lower prices.
Posted by: John McDermott | October 5, 2006 8:10 PM
I took the time to read the Aer Lingus prospectus and it states that Aer Lingus must remain more than 50 per cent in Irish ownership at all times after flotation. A Ryanair majority holding would be ideal from that point of view.
Posted by: Nick Gavin | October 5, 2006 10:29 PM
Maybe Ryanair will end the Shannon stopover. What a waste of petrol that is, making planes stop at Shannon on their way across the Atlantic.
Posted by: Henry Barth | October 6, 2006 1:08 AM
On the Irish: "An Irishman is the only man in the world who will step over the bodies of a dozen naked women to get to a bottle of stout."
Posted by: hans ze beeman | October 6, 2006 9:22 AM
On Lufthansa: "Jurgen (Weber Chairman Lufthansa Supervisory Board) says Germans don't like low fares. How the fuck does he know? The Germans will crawl bollock-naked over broken glass to get them."
I love it! Well done O'Leary! I still fucking hate Ryanair though! :-)
Posted by: Stuart McLoughlin | February 5, 2009 2:50 PM