[AMcWhirter]

Willy Walsh is currently giving evidence to the Transport Committee in Dublin.

He confirms that, if IAG were to take over EI, then the latter would operate out of LHR T2.

He also says that LHR will never have US preclearance. The attraction of Dublin to IAG is in its US preclearance and its geographical location.

If IAG takes over, Willy Walsh thinks that EI would be able to double its acquisition of long-haul planes in the coming few years. (At present EI is adding one plane a year to its long-haul fleet).

[BigDog.]

Clearly there is some hard nosed negotiation going on however if the deal does not transpire methinks it will be squarely down to a lack of trust/past established behaviours.
Chickens will have come home to roost.

[JohnHarper]

transtraxman – 12/02/2015 15:07 GMT

It is a well known secret in many financial circles that BA are finding borrowing difficult while Aer Lingus are not.

[AnthonyDunn]

It is a well known secret in financial circles that BA does not go into the market any longer for borrowing but IAG does – which is why there is now an annual IAG Capital Markets Day presentation. Speaking of which, page 4 of the November 2014 presentation made mention of:

(i) a 2015 €1.5Bn operating profit target,
(ii) anticipated a “2015 declaration of a sustainable dividend payout” and
(iii) the target of a 12% Return on Invested Capital. Then, at p12, it is stated that
(iv) the weighted average cost of capital is c10% comprising 50% equity @c15% and 50% debt @c5%.

Or is the November 2014 CMD presentation a piece of fiction and an attempt to mislead investors?

So, what evidence is there for this “well known secret…”? Some of us really would be all ears to learn what the substance, if any, there is to this assertion. In the absence of which, the assertion made above can only be seen as yet another tedious manifestation of an ongoing campaign by a self-declared “Anyone But British Airways” (ABBA) poster.

EDITED:
It would appear that BA continues to be rated in its own right. The following is dated May 2014 and is lifted from the Moody’s site:

https://www.moodys.com/research/Moodys-upgrades-British-Airways-rating-to-Ba3-stable-outlook–PR_298711

“We are upgrading BA’s ratings mainly because of materially improved earnings in 2013 as well as our expectation of further improvements over the next two years,” says Sven Reinke, a Moody’s Vice President – Senior Analyst and lead analyst for BA. “While we continue to assess BA on a standalone basis, we nevertheless take into consideration the weaker operating performance at Iberia compared with BA’s performance. While we recognize the legal separation of the two entities, we will continue to assess the ongoing restructuring initiatives at Iberia and the extent to which these could, over time, impact BA’s own financial profile, if at all.” Continues….

If any others have accounts with S&P/Moody’s/Finch and more recent information, perhaps they might like to comment on the assertion made in the previous posting.

[BusinessBabble]

Aer Lingus finances it’s fleet mainly through off balance sheet operating lease and therefore doesn’t need to borrow large sums of money like IAG, so moot point even if true which I strongly doubt given the financial results of IAG.

If the Irish Government doesn’t sell it’ll be down to political pressure rather than commercial sense.

[Carajillo2Sugar]

Aer Lingus – IAG offers new guarantee on Heathrow slots

Wee Wullie Walsh has promised existing Ireland flights will continue for “at least” five years as he continues to chase agreement for a purchase

http://www.ttgdigital.com/news/city-and-finance/aer-lingus-bid-iag-offers-new-guarantee-on-heathrow-slots/4695204.article

Ryan(l)air(y) to continue battle over Aer Lingus stake

The airline is fighting to overturn an order to sell down its stake in its rival – and the battle looks set to go to the Supreme Court

http://www.businesstraveller.com/news/101298/ryanair-to-take-aer-lingus-case-to-supreme-court

[ImissConcorde]

http://www.irishtimes.com/business/transport-and-tourism/aer-lingus-board-backs-iag-takeover-1.2103470

[LuganoPirate]

I’m sure there will be nice payoffs for the EI board if it goes ahead!

[BigDog.]

A comment from the link provided by ImissConcorde – 14/02/2015 05:11 GMT

….Of course they would say that-they all become multi millionaires if it happens. It is the worst deal possible and Aer Lingus will disappear in a few years. No guarantee whatsoever for a transatlantic service from Shannon, 5 year maximum guarantee of any service to Heathrow from any Irish airport, a 400million cash gift to BA and so on. Remember Walshs lies in the past ie We have no interest in Aer Lingus, There will be some job losses at BMI……. a few months before he closed it and guess who have their 54 Heathrow slots now? Talk is easy. Actions are what I judge on. I would not believe a word that comes out of this weasels mouth nor Aer Lingus board who will share 30 million. Always follow the money…….in this case very small money. The government should buy Ryanairs shares and stop this nonsensical deal…

I totally agree and could list an even greater number of occasions of lies and duplicity. The Eireann government needs not look far to realise the fellow cannot be trusted.

[TominScotland]

BigDog, Irish regional services have always been a politically emotive issue, no more so than Shannon. I first lived in Ireland when the Shannon stop-over was still in place and acted as a barrier to real competition out of Ireland. I would be very interested in the economics of Shannon transatlantic as I suspect that most other airlines, without Government ‘guidance’, would not operate the service on commercial grounds. Remember that Shannon to Dublin is half the distance of Plymouth to London and Plymouth does not even have an airport anymore, let alone transatlantic services!

[AMcWhirter]

TominScotland –

Shannon has a selling point in that it could be used for the new generation of long-haul Airbus A321s which I wrote about recently and which could fly transatlantic.

At the IAG presentation in Dublin last week, Willy Walsh was quoted as saying “I see no reason why Shannon cannot be developed particularly with Airbus A321LR.”

These aircraft will transform the economics of long distance flying. Of course, they will not offer the space and comfort you find on a typical wide-body plane … but that’s another story.

http://www.businesstraveller.com/news/101197/airbus-confirms-long-range-narrow-a321

[KarlMarx]

“These aircraft will transform the economics of long distance flying. Of course, they will not offer the space and comfort you find on a typical wide-body plane … but that’s another story.”

Have you been in economy on a 9 across 787, yet? 🙂

[LuganoPirate]

If I’m not mistaken, QR use the 320 from Doha to Europe. It wouldbe fine 8 across and from recollection it’s business class was pretty comfortable so I see no reason why not to operate it Shannon to NYC.

[TominScotland]

Very good point, Alex, thanks. The narrative in Ireland is often about the importance of direct links from Shannon to the US for tourism and the (relatively) small industrial base in the West of Ireland. The problem is that tourism traffic is low yield and the industrial base is, indeed, small. Hence my reference to Plymouth (a much bigger city than Limerick). Shannon as a staging post to the US via narrow bodies, with feeder flights from regional UK, would be an altogether different proposition and one which is only realistic for Aer Lingus in consort with AA/BA and not as a go-it-alone.

[PatJordan]

Now Virgin Atlantic are getting involved:

http://www.independent.ie/business/irish/virgin-atlantic-warns-proposed-aer-lingus-deal-would-result-in-fare-increases-31083491.html

Not sure what this brings to the table, no doubt it will become apparent in time.

On another note, have a look at this clip:

https://www.youtube.com/watch?v=YjTzSt2WUHI&feature=em-subs_digest

Whilst not business related, it shows a caring side to Aer Lingus.

[Author]

Posts