26 replies to this topic

[Hake.]

So it is being reported that Ignorant Arseholes Group, or IAG, will have their Aer Lingus bid accepted by shareholders merely 2 weeks after the Axis of Evil made their first bid. Similar to Skyfall, it seems now that a nice, although small character in European aviation will be killed off as it is sold into a heartless corporation, which is only interested in cutting flights to Heathrow and turning Dublin into a busy megahub for British passengers who cba going to Heathrow. The future looks dark for Irish aviation as these profit hungry monsters will jack up prices, cut peripheral routes and aid thousands of redundancies throughout Ireland. (Coincidentally, this puts EI back in the hands of the very man who wanted to get rid of the shamrock in 2003). #rebootirishaviation
If this goes through anyone want to set up an airline with me?

[Falcon444]

lol

[Northern]

Well if the Irish didn't stop bleeding money they might not need buying out - airlines are for profit not for charity, remember that.

[CourtingPsych0]

To be honest aer Lingus is one of the worst airlines to use anyway, since look at last year 5 of their aircraft all heading to spain on the same day had to declare emergencies due to lack of fuel on board thanks to the bosses not allowing pilots to use a set amount of fuel 

[Hake.]

Well if the Irish didn't stop bleeding money they might not need buying out - airlines are for profit not for charity, remember that.

EI makes €100 mill a year . Record profits for this year since 2008?

[Alfrenzo]

Well if the Irish didn't stop bleeding money they might not need buying out - airlines are for profit not for charity, remember that.

 

In fact, EI is turning a neat profit, if you didn't know.

[Hake.]

In fact, EI is turning a neat profit, if you didn't know.

Actually this brings me to my next point. As an airline which is making quite a bit of money, you would expect IAG to leave it to do it's own thing but no - it make 5.5% profits, and IAG expects 10%. For an airline which has FR on its back, it seems as if we'll be seeing price hikes, frequency cuts and lay offs to a perfectly profitable airline. But that's just the way aviation works. (Same happening to KLM under different circumstances).

[Alfrenzo]

Actually this brings me to my next point. As an airline which is making quite a bit of money, you would expect IAG to leave it to do it's own thing but no - it make 5.5% profits, and IAG expects 10%. For an airline which has FR on its back, it seems as if we'll be seeing price hikes, frequency cuts and lay offs to a perfectly profitable airline. But that's just the way aviation works. (Same happening to KLM under different circumstances).

 

Ugh. I'm hoping EI's management will be left alone - they've done pretty decent stuff IMHO.

 

I for one am hoping that an EI acquisition by IAG would bring it back into the oneworld fold, but it seems that if EI's acquisition means screwing it up, then NAHHHHH.

[Hake.]

Oneworld will probably be next stop, wouldn't be surprised if Vueling increased DUB frequencies on the back of this, but ORK and SNN - LHR will probably be affected.

[Speed Bird]

I'm sorry, but IAG bidding for EI makes a lot of sense. 

 

The airline industry in Europe is, and will continue, to go through of a process of consolidation; the big three airline groups, IAG, Lufthansa and AF/KL will continue to add smaller carriers to their portfolios. For IAG, strategically, adding EI to their network is overall a very logical decision.

 

IAG is the number one airline group across the Atlantic, indeed BA is the largest individual carrier between Europe and North America. This position in the market is a result of LHR's location being as west as it is, the very strong, high yielding local demand originating in London, and the Transatlantic Join Venture between IAG, American and Finnair. Aer Lingus with it's hub in Dublin is a smaller, niche player in the Transatlantic market. It has quite a robust, profitable business that plays on the local demand but also the connection possibilities as a result of DUB's geographic position in Europe and US pre clearance. 

 

For EI there are a number of benefits from becoming a part of IAG. The result from joining the TATL Joint Venture is only too clear, and will only have a positive impact on the airline. Financially speaking, whilst EI is profitable and has been for quite some time, the overall trend in Europe is that the smaller European carriers will struggle in this area in the coming years, with many airlines having already suffered. Furthermore, the fleet in particular will be requiring substantial investment in the coming years, the need to order a short haul fleet replacement, for example. There are questions surrounding whether or not EI can afford this. Having the pockets of IAG behind EI will of course ensure the airline will be around for many years in the future.

 

For IAG, there are also a number of benefits. LHR is not getting any less crowded, a fact we're all aware of. EI's slot holding is of course attractive, however I absolutely do not expect there to be a mass movement of slots from EI to the other IAG group airlines. I do see some reduction in EI flying to LHR; combined, EI and BA would have far too much capacity on DUB-LHR and so some reduction in frequency is to be expected. However, for IAG, I see the main reason for wanting to purchase EI is actually DUB. Like I say, LHR is not getting any less crowded, and some sort of a 'reliever' hub would be useful. Quite frankly DUB is perfect for that role, considering the advantages already described. I believe IAG would be able to build upon EI's existing business utilising the DUB hub to strengthen IAG's Transatlantic offering. In particular, EI are already quite an attractive option for passengers travelling from the UK regions to North America, an area IAG are currently quite weak in. EI would allow IAG to return to this market and I feel has massive potential for growth. 

 

Overall, I see an IAG takeover of EI as a positive move for all parties. It ensures the future of Aer Lingus and adds strength to an already very strong IAG transatlantic operation. 

[Alfrenzo]

Tl;dr, SB, but I have always though IAG-EI to make sense economic wise - provided that EI joins OW and the TATL JV.

 

The least I can hope, though, is for IAG to not screw up EI.

[Speed Bird]

The least I can hope, though, is for IAG to not screw up EI.

 

Well, let's not forget who heads up IAG...

 

Willie Walsh has a lot of experience, and of course knows Aer Lingus very well having helped turn the company around in the past. I maintain he is the best CEO in the industry; he has an excellent track record at EI and BA, and his turnaround of IB is well on it's way to success. In particular he has a strong focus on cost discipline, and this along with his mentality of allowing individual airlines within the group to largely manage their own affairs has resulted in IAG becoming by far the best performing of the big three airline groups in Europe. 

 

I whole heartedly expect EI to be very well managed under IAG.

[Hake.]

SB, your arguments are a two sided coin. LHR is not getting any less crowded, so why waste 10 daily take off slots on Cork, Shannon and Belfast? BA already has BHD and DUB - isn't that enough? Who cares if it causes hundreds of redundancies elsewhere. Also, DUB isn't getting less crowded either. 21.7 mill pax flying in and out on the one runway. Its widebody stands are used up at peak times, when they will be needed.
As the limit keeps on being raised for the new runway, we won't see one for about 10 years.
And doubts over affording new aircraft? It has quite a lot of stockpiled money (I'll find the figure later) and leasing facilities are plentiful here.
Honestly I can see few positives here, besides IAG's bank balance.

[Speed Bird]

In regards to ORK, SNN and BHD, I agree, these will likely see cuts. All will of course remain on EI or BA in some form; I see EI cutting BHD in favour of a BA operated flight, not sure what would happen with the BHD-LGW. 

 

I take your point about DUB. It is likely it will need expanding in future, but is by no means nearing capacity. Regardless, it still has a damn sight more room for growth than LHR. 

 

As for the fleet, I don't doubt EI would be able to obtain financing for leasing/purchasing aircraft. For a small carrier however, re-fleeting expenses can put a significant strain on an airline's finances. I've read a few articles that suggest this could be an issue for EI going forward.

 

If you don't mind me saying, Hake, I think you're looking at this from a very short-term perspective. EI for IAG will be an investment for the future, it really does have massive potential for growth for EI and IAG as a whole. 

[Luft]

Actually, it was kind of expected. Most airlines in Europe have four options:

-Join IAG and come under the wing of BA

-Join the Lufthansa Group and be swallowed up by Lufty but return to profitability 

-Get swept into this newfangled "Etihad Partners" alliance and be controlled by Abu Dhabi

-Continue operating on their own and go bankrupt

 

EI has been posting profits, but they're mismanaged to an extent and aren't making as much as they could. SB's right, Willie Walsh pulled a miracle of miracles and restructured Iberia, making it profitable. It was expected that Aer Lingus would continue their partnership with Etihad, perhaps with Etihad taking a larger stake in the airline, and they could pull an EY-9W or EY-AB situation with a transfer of aircraft operating various routes. 

 

With this tentative buyout by IAG, it's expected that services between the UK and Ireland would be consolidated solely into BA, and a rerouting of EI's network, but keeping the existing fleet without any transfers within IAG.  This would, in turn, possibly lead to EI RE-joining Oneworld, and hopefully conclude with a TATL JV with AAG. 

 

While Aer Lingus would be well-run under IAG, expect it to be turned into somewhat of a holiday carrier.

[CourtingPsych0]

Actually, it was kind of expected. Most airlines in Europe have four options:

-Join IAG and come under the wing of BA

-Join the Lufthansa Group and be swallowed up by Lufty but return to profitability 

-Get swept into this newfangled "Etihad Partners" alliance and be controlled by Abu Dhabi

-Continue operating on their own and go bankrupt

 

You have a very good point with this, either way airlines that don't have the numbers nor profits to stay self sufficient are screwed unless they bite the bullet and go to one of the big 3

[Speed Bird]

EI has been posting profits, but they're mismanaged to an extent and aren't making as much as they could.

 

Absolutely not. EI and their current CEO, Christoph Mueller, have done a really excellent job with the airline and the resources they have available to them. I simply believe EI have potential to grow further as part of IAG. Indeed I must stress how good a job Mueller has done. He's soon to depart for Malaysia Airlines, and I fully expect him to work his magic on them  as successfully as he has done at EI.

 

While Aer Lingus would be well-run under IAG, expect it to be turned into somewhat of a holiday carrier.

 

Again I disagree. EI have long had a large market share in the leisure sector, and indeed a lot of traffic they'd be going for, from the UK regions for example, would be lower yielding than that of some of the other IAG airlines, however one should not discount the large local business demand of Dublin in particular. Of course, I don't expect to see EI adopt a BA style of operation. Their current format of 'hybrid LCC' as I refer to it is working very nicely, and like I said earlier, one thing that IAG does very well is allow it's constituent airlines to manage it's own affairs. IB, for example, while it has experienced improvements in it's offering, is not on the same level as that of BA for the sheer fact it's market does not warrant it. I don't see how this would differ in regards to EI.

[Hake.]

But still we're going to see big price hikes - so yes, I am thinking short term. MOL and Walsh most likely have some backroom deal on the future of several routes to satisfy competition authorities and at the end of the day anyone travelling to/ from Ireland will see less service for a higher price. This is going to turn people elsewhere (hopefully back to regional airports, some good could become of this), see MNCs setting up shop elsewhere (those reliant on connection), as well as making CityJet the only nice Irish airline, not that they're doing well either.

[Luft]

http://www.airliners...d.main/6295459/

[Hake.]

http://www.airliners...d.main/6295459/