O’Leary bid for Aer Lingus…

Interesting prospective figures in any future merger between the Republic’s two biggest airlines.

The combined group would operate on about 500 routes, competing on only 17. Ryanair would combine purchasing with Aer Lingus to drive down fares and costs. Together, Ryanair and Aer Lingus handle about 70% of the passengers at Dublin Airport. The takeover would face scrutiny from Irish and European regulators.

So far the board and the Ahern government are saying no to a hostile bid from Ryanair.

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  • jfd

    Interesting move.

    Personally, not being a fan of either O’Leary or Ryanair I wouldn’t be happy seeing the former national air-line in that carper-baggers hands.

    From a business perspective the two airlines only compete head to head across 17 routes. Acquiring Aer Lingus would give Ryanair access to long haul routes into the US and Mid-east. Could be a great move from their perspective.

    One potential problems: Ryanair are a discount ‘brand’, cheap & nasty, currently working to a 21% margin. Aer Lingus, while positioned as a low fares airline is vastly superior in service and quality, it’s operating margin is around 11-12%. Force fitting the Ryanair business model into Aer Lingus brand equity will be very risky and may hurt both parties, providing Mick wants to retain the Aer Lingus brand (which he’d be mad to kill of for Ryanair)

    Heard Emirits are also sniffing around AL. That would be a real psoitive step for the ‘national carrier’ in terms of access and connection potential.

  • smcgiff

    You could call O’Leary a lot of things, but a Carpet Bagger is not one of them.

    I would have advised that initial purchase of Aerlingus shares should have been sold pretty much immediately for a 10% profit, but now the sky’s the limit (sorry!). I wouldn’t sell Aerlingus shares now, but would hold onto them for the long term to see them take off (I’ll stop now) under O’Leary management.

    There will be no White Knight. Why would another airline offer more than €2.80 when they didn’t bother coming in at ~€2.20 a week earlier.

  • jfd

    smcgiff:

    agree totally, whatever about the quality of his airline it is highly profitable!

    Personally, I think Emirates would be a better strategic move as Ryanair is a bit bargin basement!

  • Greenflag

    Ryan Air – Ireland’s national airline . It’s only a matter of time . As mcgiff says if they don’t buy at 2.20 they’re not likley to buy at 2.80.

    We need to face the facts of economic life that Aer Lingus have been avoiding for the past 20 years . Air travel is no longer the preserve of an elite few or even the middle class. It’s a basic commodity or service and thus subject to the same laws of supply and demand , price and marketing that determines the price of a packet of cornflakes on a supermarket shelf .

    Ryan Air like it’s quivalent South West in the USA acccepted the new ‘economic order’ . Aer Lingus and others are still mired in another age .

  • Harry Flashman

    I’m intrigued about the idea that Aer Lingus is “vastly superior in service and quality”, where exactly is the evidence for this assertion?

    Last summer I was travelling from Asia to Dublin via Manchester on Emirates (now that is a vastly superior airline) as I was booking the Manchester – Dublin route outside Ireland I was charged an eye watering $600 for that part of the journey. I was appalled to discover that the Aer Lingus flight had no business class (despite me paying for it) and I was charged 2 Euros for a poxy bottle of water.

    No my friends the only difference between Aer Lingus and Ryanair is that Micky O’ Leary has a more honest approach and doesn’t bullshit and blarney.

  • jfd

    Harry:

    I meant in comparision to ryanair. Seating is better. Planes are cleaner etc.

  • Cahal

    I don’t want to push this thread towards an excuse to slag off aerlingus but the quality of their transatlantic service is woeful in comparison to the likes of United, who are often cheaper.

    The only difference between Ryanair and Aerlingus is that Aerlingus fly further and massively overcharge.

  • joc

    It was delightful to here Joe Higgins of the socialist stalinist party (or whatever he calls himself) spouting on the radio yesterday.

    Fr. Ted in all his pomposity wouldn’t have been in it.

  • Greenflag

    Cahal ,

    Many years ago Aer Lingus wrote off Ryanair as being ‘ fly by nights’. Dinosaurs don’t become aware of their extinction until it’s too late .

    I hope Ryan Air do get the majority share holding in Aer Lingus . Can only be good news for transatlantic travellers IMO. The next step then would be a partnership ‘alliance’ with Southwest Airlines .

  • Jamie Gargoyle

    I can’t comment about Aer Lingus vs Ryanair as regards quality, but I know I prefer easyJet to Ryanair, not least due to the fact Ryanair still don’t have a Belfast service.

    However, what I do see is the potential for Ryanair to make a decisive move ahead of easyJet by having a subsidiary/codeshare partner which extends the range of their service massively beyond the scope of their main rival.

    It’ll also suit O’Leary who I’ve heard only every flies Aer Lingus anyway…

  • Greenflag

    ‘It’ll also suit O’Leary who I’ve heard only every flies Aer Lingus anyway… ‘

    Probably just trying out the ‘entree’ for taste purposes before he swallows the main dish 🙂

    Anyway with one Irishman -Walsh running BA and another one running Ryanair -Aer Lingus is now running from the Irish ‘competition’ and hoping to be ‘consumed’ by Arabs ?

    How the world changes 🙂

    I can already see the new Aer Lingus
    sales spin .

    Having run Aer Lingus into a desert we believe it’s desirable to sell to people who have even more desert experience 🙁

  • Tim

    It’s still entirely possible for another bidder to emerge – the airlines were never given an option to buy a controlling stake and an IPO was the only option ever seriously considered by the government.