[GreenScot]

Now on the BBC News website

http://www.bbc.co.uk/news/business-32892990

I guess it either the discussion needs to change to a new thread or the current one should say accepts not rejects.

[Travellator]

Flights from Dublin ring fenced – what about BHD to LHR and LGW, recognising that both BA. and EI operate BHD to LHR ?

[Tom Otley]

Here are a few excerpts from the release…

IAG background to and reasons for the Offer

The IAG Board believes that the acquisition of Aer Lingus has a compelling strategic rationale for the IAG Group at an attractive price for Aer Lingus Shareholders. The Acquisition is expected to provide substantial benefits to both IAG and Aer Lingus customers through an enhanced network, particularly to North America, using Dublin as a natural gateway hub for transatlantic routes. Furthermore, the IAG Board expects the transaction to deliver compelling financial benefits and create value for IAG shareholders.

Addition of a fourth competitive cost-effective airline to enhance IAG’s strategy

IAG believes that its acquisition of Aer Lingus will further enhance its customer offering, by the integration of a value-focused carrier into IAG’s European and transatlantic business. It is expected that the inclusion of Aer Lingus in a successful, profitable and sustainable European airline group will secure and strengthen Aer Lingus’ brand and long term future, offering significant benefits to both Aer Lingus and its customers.

Consistent with the IAG business model, it is IAG’s intention to operate Aer Lingus as a separate business with its own brand, management and operations, allowing Aer Lingus to continue to serve its local market and customer base, but with the benefits brought by leveraging its position as a member of the larger IAG Group. Specifically, as part of the IAG Group, Aer Lingus is expected to be better positioned to compete or partner with other airlines, negotiate with key suppliers and offer an improved customer proposition with respect to connectivity, product range, customer service and frequent flier benefits.

Compelling financial effects and value creation for IAG shareholders

The transaction is expected to generate significant integration benefits, consisting of natural network revenue synergies and cost efficiencies achieved through economies of scale and sharing of best practice. With these integration benefits, IAG expects Aer Lingus to meet or exceed IAG’s own financial targets over the life of the current business plan as to operating margin and return on invested capital as outlined at the annual IAG Capital Markets Day, November 2014.
The Acquisition is expected to deliver earnings accretion in the first financial year post-Acquisition.

Increased connectivity for Ireland

Ireland’s location in western Europe makes it a natural gateway to connect Europe and North America and it is anticipated that the Acquisition will bring benefits to both Aer Lingus’ long haul and short haul networks within the IAG Group.

In addition to improving network options for IAG’s customers and those of its oneworld partner airlines, IAG also expects to gain new feed from the Irish market to support the development of its London and Madrid hubs and help underpin its long haul routes into Asia-Pacific, Africa and Latin America.

The Acquisition is expected to bring enhanced access to IAG’s global cargo network for Irish customers, with Aer Lingus’ cargo business benefitting from its global reach and sales channels. By 2020, it is expected that Aer Lingus’ cargo capacity will have increased by 50 per cent.

It is anticipated that connectivity through Aer Lingus’ short haul services, including on the Dublin, Cork and Shannon to London Heathrow routes, will benefit directly from sales and marketing activities conducted on Aer Lingus’ behalf by the British Airways, Iberia, Vueling and oneworld partner sales forces.

It is expected that not only will the proposed network improvements result in better connectivity to and from Ireland, but also lead to a better use of the infrastructural investment that has taken place at Irish airports.

Transatlantic growth

Aer Lingus’ well established base at Dublin Airport will allow IAG to use Dublin’s advantageous geographical position for serving connecting flows between Europe and North America, particularly the US. This strategy will be supported by access to the US pre-clearance facilities at both Dublin and Shannon airports (the only two US immigration pre-clearance facilities in Europe), representing a unique selling point for international business and leisure travellers alike.

IAG’s ambition to develop Aer Lingus’ long haul capacity will be supported through an enhanced connectivity with other IAG carriers, the inclusion of Aer Lingus within the oneworld alliance, of which British Airways and Iberia are key participants, and through Aer Lingus joining the joint business agreement that IAG operates over the North Atlantic with American Airlines and Finnair (the “North Atlantic Joint Business”).

IAG believes that the support of the IAG Group’s resources will help to underpin the delivery of Aer Lingus’ existing long haul growth plans and provide opportunities to accelerate and extend them, including through the addition of new US destinations to Aer Lingus’ route network.

• For the 2016 summer season, it is the opinion of Aer Lingus and IAG that two new transatlantic destinations can be added.

• By 2020, IAG believes that IAG and Aer Lingus could deliver up to 2.4 million more passengers, four additional destinations in North America (including the two new transatlantic destinations to be added in 2016) and eight additional aircraft.

Growth from Cork Airport

IAG’s plan for Aer Lingus is to sustain and grow its business at Cork airport. Specifically:
• Aer Lingus’ service to Paris will be continued and promoted together with more than 30 destinations which IAG offers from Paris;
• Aer Lingus’ Amsterdam route will be continued; and
• growth opportunities with tourism and business interests in the Munster region will be pursued to exploit the potential that exists in all of the short haul routes currently operated by Aer Lingus from Cork.

Growth from Shannon Airport

IAG’s plan for Aer Lingus is to sustain and grow its business at Shannon airport. Specifically:
• the Shannon flights operated by Aer Lingus to Boston and New York are expected to be strengthened as a result of Aer Lingus becoming part of the North Atlantic Joint Business;
• IAG will consider options to sustain and enhance the existing all-business British Airways twice-daily service via Shannon airport, including by Aer Lingus codeshare and by accepting customers originating from Shannon;
• Aer Lingus’ future support for existing American Airlines flights to Philadelphia will provide opportunities for additional capacity and increased connectivity to the US; and
• growth opportunities with tourism and business interests in the Mid-Western Ireland region will be pursued together with IAG’s US partner, American Airlines.

Growth from Knock Airport

IAG’s plan for Aer Lingus is to sustain and grow its business at Knock airport. Specifically:
• Aer Lingus’ service to London Gatwick will be maintained and made more sustainable when connected to over 60 IAG destinations served from London Gatwick; and
• Aer Lingus will actively work with Knock airport to explore the new growth opportunities that will be available as part of the IAG Group.
Growth from other Irish airports

IAG believes that under its ownership, Aer Lingus would have a significantly improved ability to grow its presence at other key Irish airports by being part of IAG’s customer loyalty programme, leveraging IAG’s sales and marketing presence outside Ireland, IAG’s know-how and scale, and the additional traffic potential from connections to and from the broader IAG network.

[AnthonyDunn]

Now for an interesting head-to-head: just what will O’Blarney demand from Walsh for Flyanscare’s EI equity? There is a certain poetry to these two having to negotiate with each other.

[AisleSeatTraveller]

what’s next for IAG, re-invest in Flybe to feed Aer Lingus from the UK’s regions?

still think that the takeover could used to free LHR slots for Asian Adventures by routing a couple of LHR-JFK flights (say middle of the day departures with the 777 (operating using the EI existing slots)) through Dublin or Shannon (with US customs clearance in Ireland) – or perhaps that is too imaginative

[AnthonyDunn]

FT 27 May 2015: National pride assuaged in Aer Lingus stake sale to IAG (by Peggy Hollinger, Industry Editor)

Amsterdam’s Schiphol airport once cheekily boasted of being London’s third runway, thanks to the number of UK connections and passengers who travelled through its terminals. Now that the Irish government has backed the sale of the state’s 25 per cent stake in Aer Lingus to International Consolidated Airlines, parent of British Airways and Spain’s Iberia, there may soon be a new claimant for the title.

http://on.ft.com/1PMB8bp

[Subscription required]

Before anyone asks, and bearing in mind that this is just what I have been saying all along, I am not the industry editor of the Financial Times.

[BigDog.]

O’Leary a “Kingmaker” may try to extort an even higher price for his, (and therefore all), outstanding shares.

http://www.telegraph.co.uk/finance/newsbysector/epic/IAG/11632977/Ryanair-kingmaker-in-IAGs-1bn-takeover-of-Aer-Lingus.html

…“Presumably if Ryanair rejected the offer as too low, the onus would be on IAG to return with a higher bid for all shareholders.” …

[AisleSeatTraveller]

is Mr O’Leary in a position of strength? he has to sell down his stake, following several appeals against a court judgement

Are IAG prepared to be a majority shareholder and sit it out until the highest possible court reject Big Gob’s last appeal?

Saying that the man will try to maximise his return, as is his duty to his shareholders

[ImissConcorde]

If O’Leary rejects the offer from IAG then the Aer Lingus/IAG deal will be scuppered and the Aer Lingus share price will crash leaving O’Leary with far less when he is forced to sell.

[AisleSeatTraveller]

suspect the Irish Government has already planned how their share will be spent

[canucklad]

I find myself slightly warming to the takeover, not because I’m pro IAG. As I’ve said before, building cartels is anti competitive and IMO the customer will ultimately suffer at the expense of the shareholders.
What’s changed is that the elephant in the room , has now got a lot stronger. FR’s recent results are impressive.
And as a result EI probably now finds itself stuck between a rock and a very, very hard place. The lesser of 2 evils some might say !!

I would still distrust IAG though, in amongst all the positive statements within the excerpts is this little gem…….

————In addition to improving network options for IAG’s customers and those of its oneworld partner airlines, IAG also expects to gain new feed from the Irish market to support the development of its London and Madrid hubs and help underpin its long haul routes into Asia-Pacific, Africa and Latin America.————-

It seems that access to LHR is a critical factor in the deal, if I was the Irish government, I’d hold off until the inevitable decision is made on the 3rd runway at LHR. This would increase pressure on Westminster to stop procrastinating for purely selfish political reasons.

[Carajillo2Sugar]

@ImissConcorde – good point about what would happen if O’Lairy were to scupper the deal.

Currently, Ryanair own 29.8% of Aer Lingus and the IAG offer values this stake at approx £400m. Ryanair have more than than a few new aeroplanes on order and this tidy little sum will certainly help pay a few bills!

That 29.8% stake cost Ryanair just over EUR400m so, with today’s exchange rate of £1 = EUR1.40, they will trouser EUR560m, giving them a profit of EUR160m. Not a bad return on their investment!

The IAG offer values Aer Lingus at EUR2.55 a share, almost double what Ryanair offered 3-years ago (EUR1.30 a share). O’Lairy may be many things but he knows a good deal when he sees it – just don’t expect him to roll over too quickly or with grace! If you ever get to shake hands with him, make sure you count your fingers afterwards….

It’s also worth noting that Etihad own a 2.99% stake, too.

[ImissConcorde]

Etihad’s position

http://www.irishtimes.com/business/transport-and-tourism/etihad-willing-to-sell-aer-lingus-stake-to-iag-1.2144114

[canucklad]

O’Leary also craves influence…….At the moment he’s got a finger in both pies !

If he sells his shares, it becomes a 6 pointer game he loses…. NO say in EI & a new corporate giant in direct competition at Dublin, his home base.

As a result, he loses a big deal of influential power within the Irish /European aviation industry, not discounting political influence…… And Willie celebrates ! .

[transtraxman]

At last the deal is done. Ryanair accepts the IAG offer.

http://www.businesstraveller.com/news/101849/ryanair-to-sell-aer-lingus-stake-to-iag

As also reported on Ryanair´s website….
“Ryanair Board Votes To Accept IAG Offer For Aer Lingus Stake”.
10 Jul 2015

http://corporate.ryanair.com/news/news/150710-ryanair-board-votes-to-accept-iag-offer-for-aer-lingus-stake/?market=ie

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