Ryanair to buy Aer Lingus ?

[superfly]

In my personal view, and I'm not a corporate strategy consultant, just another John Doe, the main reason why FR wants to buy EI is the fact they know themselves all too well what the weaknesses and strenghts of their ultra low fare model is. FR wants to foray into transatlantic flying, especially with Norwegian Air Shuttle launching their B787's. They also know that the only way to directly compete with U2, VY, 4U, DY and similar without relinquishing their own model is by setting up, or buying, another airline.

O'Leary has repeatedly mentioned he doesn't want to eliminate EI. The EI fleet is not that old as suggested by sean1982, they continiously add new airbusses to replace older ones, last time I checked the oldest plane entered their fleet new in December 1998. Average age of around 7 years, few airlines of their age and standing will do better!

Ryanair will cover the bottom end of the market, aimed at people who compare flying to taking the bus. Aerlingus will become the alternative for people looking for a smoother, more comfortable experience, flying into major airports. If O'Leary can get his hands on EI, expect it to grow rapidly, setting up new FR style hubs accross Europe, and attacking the EU-US market not only out of DUB.

I believe this to be more than a calculated guess...

[airazurxtror]

British Airways has struck a deal with Ryanair to purchase more than 85 per cent of Aer Lingus’s slots at the airport, which are currently used to provide services to Dublin, Shannon and Cork, said three people familiar with the agreement between Ryanair and British Airways.
Heathrow is running at near full capacity, so the opportunity to buy Aer Lingus’s slots at the airport could provide British Airways with an important means to eventually expand its long-haul services.
Ryanair is trying to secure regulatory approval for its third takeover bid for the Irish flag carrier.
British Airways is offering to take responsibility for many of Aer Lingus’s services out of Heathrow for at least three years.
With British Airways operating these services, Ryanair is privately saying that a combined Ryanair-Aer Lingus would not be dominant on those routes, said people familiar with the Irish budget carrier’s stance.
However, British Airways would run these services in place of Aer Lingus for between three and five years – after that it would have the right to buy the Irish flag carrier’s Heathrow slots and reallocate them to different destinations, such as New York.
In the same regulatory process,*Flybe, the smaller UK airline that has issued four profit warnings since its 2010 flotation, has offered to operate flights for three years on 20 routes where Ryanair and Aer Lingus currently both have services.

(source: http://www.ft.com/intl/cms/s/0/28317...#axzz2F4LyABZq)

[sn26567]

Heathrow is running at near full capacity, so the opportunity to buy Aer Lingus’s slots at the airport could provide British Airways with an important means to eventually expand its long-haul services.

I'm afraid that the European Commission will not like the fact that BA, which is already by far the dominant carrier at LHR, will increase its number of slots at the airport. And I'm expecting Sir Richard (and his new ally Delta) to voice his discontent if the deal goes through!

[cnc]

BA should get some 50 more slots imho as home carrier

[RoMax]

End of story. The government rejected RYR's offer and as a result they'll not sell their 25,1% in Aer Lingus.
Ryanair would step into EI and take it off the Irish Stock Exchange if they could secure 75% or more of the shares, with the government not selling their 25,1% it's impossible for RYR to do that, even if the EU approves the deal.

The Minister of Transport said RYR's bid was not in the best interest of competition, connectivity and employment. The government is still committed to selling their stake and will appoint new advisors in 2013.

http://www.rte.ie/news/2012/1218/govt-w ... anair.html

[airazurxtror]

http://www.ryanair.com/en/news/ryanair- ... -statement

Ryanair said it had no comment to make on the Minister Varadkar’s statement. Since the Government owns just 25% of Aer Lingus, it has no power to block Ryanair’s offer, which can still be successfully completed if we acquire a shareholding of 50% or more (Ryanair currently owns 30%).

End of the story ? Not yet.

[RoMax]

End of the story ? Not yet.

They own 25,1% (or 25% + one share, not sure). That's a share they can use to block certain decisions, so without that share the take over is quite worthless as the government is not intending to work with RYR. They can not block the take-over of the other shares, but they can block RYR in taking strategic decisions in RYR. And the other shareholders know that as well.

[pressman]

Simple as this , once FR own 51% of Aer Lingus , they can do anything they want , the other 49% cant block anything .

[RoMax]

Simple as this , once FR own 51% of Aer Lingus , they can do anything they want , the other 49% cant block anything .

RYR wants to take over EI completely, they don't want the government to keep their share. It's as simple as that.
And that's, btw, only in the case the EU approves the deal (and that's unlikely). Because, don't you think the decision of the Irish government will have no influence on the EU's decision?!

[airazurxtror]

They own 25,1% (or 25% + one share, not sure). That's a share they can use to block certain decisions, so without that share the take over is quite worthless as the government is not intending to work with RYR. They can not block the take-over of the other shares, but they can block RYR in taking strategic decisions in RYR. And the other shareholders know that as well.

Ryanair actually owns 30% of Aer Lingus and can do nothing about strategic or other decisions made by the Aer Lingus management, because they are a minority.
The Irish Government will be in the same situation if they keep only 25%.
Besides, the Irish Government is hard pushed by the European Commisssion to sell their part in Aer Lingus (and other enterprises) in order to lessen the Irish public deficit.

[RoMax]

Besides, the Irish Government is hard pushed by the European Commisssion to sell their part in Aer Lingus (and other enterprises) in order to lessen the Irish public deficit.

They are still going to sell it, but not to RYR. And RYR is nog going to buy EI without these 25%, neither will another airline step in when RYR already takes the other 75% (in the case the EU approves this deal). So both for RYR as for the government (and EI itself of course), this isn't the situation they hoped for.

[LJ]

End of story. The government rejected RYR's offer and as a result they'll not sell their 25,1% in Aer Lingus.
Ryanair would step into EI and take it off the Irish Stock Exchange if they could secure 75% or more of the shares, with the government not selling their 25,1% it's impossible for RYR to do that, even if the EU approves the deal.

Didn't EY also have a 3% stake in EI? I recall they had a shareholding in EI though i don't understand why (their other shareholdings are at least 10%, though they seem to favour 20%+ stakes).

[RoMax]

Didn't EY also have a 3% stake in EI? I recall they had a shareholding in EI though i don't understand why (their other shareholdings are at least 10%, though they seem to favour 20%+ stakes).

EY is considering to take over the governments share in EI (or possibly even more). So I believe the government will try to get Etihad (or maybe even IAG) that far to take over EI. The government and EI itself really prefer that above a RYR take-over.

[sn26567]

Ryanair's CEO Michael O'Leary still believes he can get a go-ahead from the EU Commission. He is ready to abandon all 46 destinations in which Ryanair competes with Aer Lingus and pretends that several airlines are interested in taking over most of the routes.

http://www.bloomberg.com/news/2013-01-2 ... roval.html

According to The Financial Times journalist Alex Barker, Ryanair offers to sell 40% of Aer Lingus short-haul routes to Flybe in a bid to get EU takeover clearance.

[sn26567]

The European Commission has again extended the deadline for making a decision on Ryanair’s bid to buy Aer Lingus.

The commission was due to deliver its verdict on the takeover bid on February 27 but this has been delayed until March 6. The decision had already been delayed from its original deadline of January 2013.

Ryanair is reported to have made a series of new concessions, officially known as “remedies”, in an attempt to persuade competition officials to allow the takeover to go ahead.

[sn26567]

Ryanair offers Flybe cash to take on Aer Lingus routes (according to some sources)

Ryanair has offered Flybe €100m to takeover almost half of Aer Lingus' short-haul services as it seeks to European Regulatory approval to buy its rival according to two people familiar with the matter.

Under the proposed offer Flybe would take-over 43 Aer Lingus routes, more then 10 aircraft and associated crew under a binding agreement filed with the European Commission. Ryanair would forgo around €20m of Aer Lingus' pre-tax profits as a result.

Ryanair withdrew proposed transfers of slots at London's Heathrow airport to International Consolidated Airlines Group SA (IAG) owner of British Airways. Instead, British Airway's would operate flights from London-Gatwick to Cork, Dublin and Shannon.

Details: http://flightstatseu.blogspot.be/2013/0 ... -100m.html

[ticketbuyer]

British airline Flybe has agreed with Ryanair to create an Irish carrier known as Flybe Ireland in the event of a successful bid by Ryanair for rival Aer Lingus.

http://www.flybe.com/corporate/media/news/1302/6.htm

[sn26567]

Flybe with 2 new bases (Dublin and Cork), at once 43 new routes out of Ireland, and for the first time 9 larger A320 aircraft: undoubtedly a major expansion after expanding in Finland and Scandinavia.

Nice to be ambitious, but do they really have the capacity to undertake such an expansion, knowing their current financial difficulties? OK, they would receive 100 million euros from Ryanair, but that's peanuts to what is necessary to launch such an enterprise.

[tolipanebas]

Meanwhile, Aer Lingus reported a 40% increase to its operating profits, thus demonstrating beyond any doubt it is a sustainable stand-alone business with a unique place on the Irish market.

http://www.rte.ie/news/business/2013/02 ... e-by-40-7/

[sean1982]

which will be more unique in the near future when 2 strong irish airlines join hands.