Takeover bid of IAG on Aer Lingus

[sn26567]

British Airways-owner IAG said it had approached Aer Lingus about a takeover bid, which was rejected by the Irish company's board.

IAG said in a statement on Thursday 18 December that it was issuing the statement in response to the recent movement in Aer Lingus's share price, which were up as much as 15 percent earlier in the day following reports of a bid.

"There can be no certainty that any further proposal or offer will be forthcoming," IAG said in its statement.

No to Ryanair, no to British Airways: Aer Lingus wants to remain independent!

[globetrotter]

Maybe Etihad might win them over.

[airazurxtror]

With Aer Lingus rejecting the IAG approach it is increasingly apparent that Ryanair will play the kingmaker if the takeover goes hostile, The Times reported.
The low cost carrier holds a 29% stake in Aer Lingus and there was growing speculation last night that chief executive Michael O’Leary could vote his stake in favour of IAG’s overtures.
In addition to the Ryanair shareholding, built up during three failed takeover attempts in recent years, 25% of the airline is owned by the Irish government. A further near-5% is held by Etihad Airways.

The UK’s Competition and Markets Authority is due to make a ruling soon that could result in the forced disposal or sell-down of Ryanair’s Aer Lingus stake on the grounds of market interference.
“Do you think Ryanair would rather have some regulator forcing it to sell its shares at a predetermined price or do you think it would rather take control of the situation and do a deal on its own terms?” a source was quoted as sayings.

Read more :
http://www.travelweekly.co.uk/Articles/ ... ingus.html

[sn26567]

Late on Friday (9 January) IAG issued the following statement.

“International Airlines Group (IAG) notes recent press speculation and confirms it submitted a revised proposal to make an offer for Aer Lingus on 29 December 2014, which has been rejected by the Board of Aer Lingus. The revised proposal consisted of a cash offer of €2.40 per Aer Lingus share, subject to certain pre-conditions, representing an improvement to the €2.30 per Aer Lingus share that IAG had originally submitted.

There can be no certainty that any further proposal or offer will be forthcoming. A further statement will be made if and when appropriate”.

[airazurxtror]

Ryanair Chief Marketing Officer Kenny Jacobs told journalists in Dublin that it expects International Airlines Group to make a new bid for Aer Lingus within days, adding that Ryanair has no particular concerns about British Airways owner IAG taking over Aer Lingus.

Jacobs said that Ryanair has not been approached directly by IAG about its 30 percent stake in Aer Lingus.

For more visit http://www.businessworld.ie

[airazurxtror]

However, Mr Jacobs said: "We’ve been actively looking for people to make an offer".
Mr Jacobs said that IAG will "probably" need to pay between €2.50 and €2.70 a share.
Activist investor Crystal Amber, Aer Lingus' biggest City shareholder, has said that the Irish carrier is worth a "minimum" of €2.75 a share. Richard Bernstein, investment adviser at Crystal Amber, has told The Telegraph IAG could be forced as high as €3.

http://www.telegraph.co.uk/finance/news ... stake.html

[sn26567]

IAG tables fresh bid for Aer Lingus

IAG, the parent company of British Airways (BA), has approached Aer Lingus about a fresh takeover bid for the Irish carrier.

The board of IAG had authorised an improved all-cash offer earlier this week worth at least €2.50 a share, which would value the Dublin-based airline at more than €1.3bn (£971m). Directors of Aer Lingus discussed the proposal on Friday with their investment banking advisers from Goldman Sachs.

The fresh overture could be sufficient to persuade Aer Lingus to enter into formal takeover discussions with IAG, although it was unclear this weekend whether there were significant conditions attached to the proposal.

IAG's chief executive, Willie Walsh, is a former Aer Lingus pilot who went on to run the airline before taking the helm at BA in 2005. He has made two previous approaches for the Dublin-based carrier, pitched at €2.30 and €2.40 a share, in the past six weeks.

Mr Walsh's attempt to acquire Aer Lingus is designed to cement its grip on take-off and landing rights at London's Heathrow Airport, while enabling him to improve the Irish carrier's profitability by combining some operations with those of IAG. Already the largest carrier at Heathrow, a merger of the two companies would create a group with close to half of the available slots there.

Ryanair has indicated that it would be prepared to consider an offer of between €2.50 and €2.70 a share.

The Irish Government holds a 25.1% stake in the airline, and reports have suggested that it could insist that IAG retains Aer Lingus's Heathrow slots solely for flights to and from Ireland as a condition for approving a deal.

Full article: http://news.sky.com/story/1414126/ba-ow ... aer-lingus
Also: http://uk.reuters.com/article/2015/01/2 ... C020150124

[Inquirer]

According to De Tijd, which bases itself on sources in the UK, the deal is done.

http://www.tijd.be/detail.art?a=9592643&n=3085&ckc=1

[sn26567]

According to De Tijd, which bases itself on sources in the UK, the deal is done.

http://www.tijd.be/detail.art?a=9592643&n=3085&ckc=1

It seems that De Tijd has been very quick to release the news. BBC just confirmed that Aer Lingus is "set to approve" the IAG take-over bid.

http://www.bbc.com/news/business-30967346

I wonder whether the EU will allow IAG to control even more slots at London Heathrow.

[RoMax]

I wonder whether the EU will allow IAG to control even more slots at London Heathrow.

LHR of course is a difficult case (London as a whole being the biggest air traffic market in Europe and LHR being operated almost to 100% capacity). But apart from that, BA is with slightly over 50% of the slots less dominant compared to e.g. AF at CDG or LH at FRA and MUC, etc. But the fact that it's so difficult to get a slot at LHR, makes it a different situation of course.

[sn26567]

Aer Lingus board recommends €1.36 billion (€2.55 per share) offer from IAG

* Subject to how shareholder interests addressed
* IAG would operate Aer Lingus as separate brand
* Government faces calls not to sell ahead of election
* Ryanair CEO says will examine competition proposals

http://www.reuters.com/article/2015/01/ ... V420150127

Aer Lingus would also rejoin oneworld alliance, which it left on March 31, 2007, and become a part of IAG’s transatlantic joint venture with American Airlines.

The €2.55 per share proposal remains subject to Ryanair and the Minister for Finance of Ireland accepting the offer and due diligence.

[sn26567]

Irish government hires bankers to review Aer Lingus takeover

http://www.telegraph.co.uk/finance/news ... y-IAG.html

Irish transport, tourism and sport minister Paschal Donohoe said that the potential sale of the state’s "Aer Lingus shares will be given very careful examination before the government takes any decision on the issue”.

Mr Donohoe said that a committee with representatives from the transport and finance departments, as well as from the National Treasury Management Agency, were examining the issue and would then report to the government before any final decision was taken.

In an early effort to soothe a political backlash, IAG has committed to “continue to provide connectivity to Ireland” and operate Aer Lingus as a “separate business with its own brand, management and operations”.

[Passenger]

in-dept analysis by anna.aero:

http://www.anna.aero/2015/01/28/aer-lin ... fic-flows/

[airazurxtror]

The reality of Irish aviation is the fact that Aer Lingus will fly nine million passengers this year and Ryanair will fly 90 million. Yet for many Irish people, Ryanair is still the upstart and Aer Lingus the national treasure. This disparity between reality and perception appears to distort the discussion around the Aer Lingus takeover by IAG, the British Airways-led airline conglomerate.

But Ryanair hasn't just powered ahead of Aer Lingus, it has moved ahead of everyone. It carries three times more passengers than British Airways and 20 million more than the German giant Lufthansa.

The airline business is going through enormous change and the question is where all this will leave a company like Aer Lingus? If Aer Lingus needs the protection of a big owner like IAG, then the Government needs to act in the best interests of the company and let it go. So let's stand back a bit and try to assess the reality of the aviation business right now.

Low-cost airlines are the only ones really growing in Europe. What this tells us is that the low-cost model of airline travel is winning all over Europe. Ryanair has spawned copy-cat airlines like Norwegian, Pegasus Airways, Wings and Wizz, all challenging conventional carriers. British Airways is actually only the UK's third biggest airline after Easyjet and Ryanair. The future of mass-market air travel in Europe is low cost. And the trick the low-cost carriers stumbled on is a bit of consumer psychology that we never thought about: people don't so much travel to destinations but travel at a price; if you make the price low enough, people will take a chance.

What does Aer Lingus do in this context?

Read more :
http://www.independent.ie/opinion/colum ... 43951.html

Note : it would be time perhaps to change the heading of this topic ?

[RoMax]

Some comments on your post airazurxtror.

First of all, yes indeed the LCC model changed aviation after deregulation, first in the US and some years later in Europe (because to be fair, you call EZY, Norwegian, PGS, Wizz, etc. copy-cat airlines, but MOL doesn't hide the fact that he based FR on the Southwest model and I immediately add that there is nothing wrong with that, that's how the economy and basically everything works, someone goes first the rest follows if it's successful).

Secondly, what were are currently seeing is not pure LCC or pure FSC (or FSNC), but an ever increasing amount of hybrid carriers that prove to be equally successful as many pure LCC's in let's say the past decade. Even FR is no longer the text book example of a LCC (with assigned seating, a business pax. offer, serving high frequency business routes between primary airports, etc. ). And again, there is nothing wrong with that, it's a natural evolution. And we see the same with FSC's. Can you still name 1 pure FSC in Europe or the US? Carriers (both LCC and FSC) are changing their business models and are coming closer to each other again. That's why I don't agree with the fact that the only growth we see is in the LCC segment, yes currently growth is still larger in that segment in Europe, but we'll grow to a more US-like market where also the past-pure-FSC's (now hybrid's) are doing great and growing and the LCC's not growing exceptionally faster than the rest.

And third, to come back to the real subject of this topic. I said this a lot of times before, but again, you CANNOT compare a 'national' carrier with a Europe-wide carrier. Why are Ryanair and easyJet and Norwegian etc. so big? Not because they found the holy grail of aviation, but because a cost-effective business model works in every industry and the deregulation allowed them to operate throughout the continent (same in the US) with bases all over the place. Even Lufthansa or Air France cannot be compared with Ryanair or easyJet, they operate to/from one country. How many bases does FR operate, in how many countries? Again, nothing wrong with it, not saying that, but you can't compare a 'national' carrier with such airlines.

Also about the national Irish feeling of Aer Lingus compared to Ryanair. Isn't that normal? FR is long pas the stage that they were a real Irish carrier, there is hardly anything that really connects them with the country except for its history and the fact that Ireland is a financial paradise for them. That's a completely different situation with Aer Lingus. Also, and that's simple marketing, Ryanair has an extremely strong brand, but the Aer Lingus brand (in Ireland!) gives another 'feeling' which is more attractive to many people. It's like comparing Apple with Huawei (except that EI doesn't have such high prices in most cases, that's also why EI is a profitable carrier nowadays).

[sn26567]

The analysis of The Independent fails to take into account an important factor: the turnover and the profit. The success of an airline is not measured in the number of passengers, which can be subject to various interpretations. Do you prefer 1 million passengers paying 25 euros for a short trip, or 100,000 passengers paying 500 euros for a long-haul trip, or even 10,000 passengers paying 5,000 euros for a long-haul business class?

[RoMax]

The analysis of The Independent fails to take into account an important factor: the turnover and the profit. The success of an airline is not measured in the number of passengers, which can be subject to various interpretations. Do you prefer 1 million passengers paying 25 euros for a short trip, or 100,000 passengers paying 500 euros for a long-haul trip, or even 10,000 passengers paying 5,000 euros for a long-haul business class?

That's also why usually ASK and RPK is used to determine capacity and demand and comparing airlines in size (besides financial factors like revenue).

To come back the the 'analysis' of The Independent, it maybe gives a good overall overview of the size of the industry and the importance of EI in it, but except for giving such a broad overview, he doesn't go in depth to what EI can contribute. EI is a small/medium-sized carrier, but one with some important niches (such as it's transatlantic network, but also the (despite FR) remaining strenght on the Ireland-Europe and mainly Ireland-UK market).

[Stij]

Thanks RoMax for this constructive informative post!

Cheers,

Stij

[sn26567]

Irish Prime Minister wants 'cast iron' guarantees on Aer Lingus sale

The owner of British Airways must provide some sort of "cast iron permanent guarantee" in respect of connectivity for Cork, for Shannon, Dublin and a lesser extent Knock, if the government is to even consider its bid for Aer Lingus, Prime Minister Enda Kenny said on Sunday 1 Feb.

Under pressure from the airline's trade unions and opponents in parliament, resistance is building within government around parting with its 25 percent holding, weighing on the airline's shares as IAG decides on a formal bid.

A successful takeover would give IAG more take-off and landing slots at London Heathrow Airport, BA's home base and a major European hub for international flights. Government MPs fear some slots would no longer be used to service Ireland.

IAG intends to operate Aer Lingus as a separate business with its own brand and said it recognises the importance of direct air services for investment and tourism in Ireland. Kenny said he needed to see flesh on those initial intentions.

Full report from Reuters: http://uk.reuters.com/article/2015/02/0 ... KW20150201

[airazurxtror]

Aer Lingus, at the centre of a takeover bid by British Airways owner International Airlines Group, saw total January numbers fall by 5.7% year-on-year to 614,000.

Short-haul carryings dropped by 7.6% to 474,000 while Aer Lingus regional numbers were down by almost 14% to 68,000.

However, long-haul passengers using the airline’s transatlantic services rose by 22% from 59,000 in January 2014 to 72,000 last month.

The overall load factor was up by 2.4 percentage points to 68.9%, with improvements in both short-haul and long-haul.

http://www.travelweekly.co.uk/Articles/ ... syjet.html