Does this mean we could see RYR at Heathrow…..

Probably not..

Aer Lingus would stay separate following takeover: Ryanair
David Kaminski-Morrow, London (05Oct06, 08:56 GMT, 627 words)

Irish budget carrier Ryanair’s extraordinary attempt to take over flag-carrier Aer Lingus centres on a cash offer of €2.80 ($3.56) per share for the airline, which would value Aer Lingus at €1.48 billion.

This offer represents a 27% premium on the €2.20 share price fixed last week for Aer Lingus’ initial public offering, and 12% over yesterday’s closing price for the stock.

Ryanair Holdings has acquired more than 16% of the issued share capital of Aer Lingus, by picking up nearly 85 million shares through a subsidiary called Coinside, and is intending to make an all-cash offer for the remaining shares. It says that its offer is conditional on Ryanair’s obtaining at least a majority stake in the flag-carrier.

“This offer represents a unique opportunity to form one strong airline group for Ireland and for European consumers,” said Michael O’Leary, speaking as he revealed the audacious takeover bid today.

“We will expand, enhance and upgrade the Aer Lingus operations. This offer, if successful, means both companies will continue to operate separately and compete vigorously in the small number of routes on which we both operate – currently around 17 of the approximately 500 routes operated by the two airlines.”

He says that the acquisition price being put forward is an “excellent” offer, arguing that the Irish Government will generate more than €500 million from the sale of its Aer Lingus shares and adding that the airline’s employees will also collectively gain more than €220 million.

“The combined strength of Ryanair and Aer Lingus would establish an Irish airline group with over 50 million passengers annually, capable of competing on the European and world stage against other large European airline groups,” says O’Leary.

If the takeover is successful Ryanair – which will retain the Aer Lingus brand – intends to reduce the flag-carrier’s average short-haul fares, cut its fuel surcharges and trim costs. It says it will retain slots at London Heathrow and all profitable routes operated by the airline.

Ryanair will also give Aer Lingus access to financing benefits to which the budget carrier has access, and upgrade its long-haul fleet. Ryanair claims that Aer Lingus’ long-haul product has “not kept pace with the competition”.

“The board of Ryanair intends to deliver a publicly owned, Irish-managed and -headquartered airline group with the necessary ambition, expertise, financial strength and cost base to take on European and global competitors well into the future,” says Ryanair.

“As an island nation, Ireland is critically dependent upon strong and secure low-fare airline services in order to sustain and develop tourism and economic growth.

“Investing in Aer Lingus is attractive for Ryanair and its shareholders because, among other things, Aer Lingus’ earnings yield is superior to the returns currently available on Ryanair’s cash deposits.

“Ryanair believes that there will be opportunities – by combining the purchasing power of Ryanair and Aer Lingus – to reduce operating costs, to increase efficiencies and to pass on these savings in the form of low fares to the travelling public.”

It claims that Aer Lingus’ short-haul fares are presently “far too high” and that low-fares strategies of Ryanair can be applied to the flag-carrier.

Dublin-based Ryanair has traditionally shunned takeover opportunities, preferring to expand organically, although it made an exception when it picked up budget carrier Buzz three years ago. But O’Leary points outs that the acquisition of Aer Lingus would echo the consolidation being undertaken in other parts of the European airline industry.

“Since we envisage that the two companies would be run separately, in the event that this offer is successful, nothing in this transaction will deflect Ryanair from continuing to focus on its own pan-European expansion or from continuing to deliver unit-cost reductions and continuing to offer lower fares to millions of Ryanair’s European passengers,” adds the budget carrier.

Source: Air Transport Intelligence news

When I saw the news about this on ATI earlier my instinct was that its a way of levering further discounts from Airbus. I don’t know what is in the contracts, but I would assume that there is a clause about late delivery, or at least delivery times, and with this in mind I think EK are probably playing up for the cameras to force Airbus into some further financial benefits for accepting the delay.

Thank heavens!!!!

I read some documents around this sort of subject as part of my dissertation, looking through the references I ahve picked out a small selection for you. I cannot guarantee their content as I read them nearly 3 years ago now, but I’ve picked the ones that sound as though they could be useful.

Barrett, S.D. (2001) Market entry to the full-service airline market – a case study from the deregulated European aviation sector, Journal of Air Transport Management, 7:189-193

Bhagwanani, R. (2004) Low-cost loyalty, Airline Business, March:51-52

Chang, Y.H., Chen, F.Y. and Shon, Z.Y. (2003) Airline e-commerce: the revolution in ticketing channels, Journal of Air Transport Management, 9:325-331

Feighan, A.R. (2001) Traffic Distribution in the low-cost and full-service carrier networks in the US air transportation market, Journal of Air Transport Management, 7:265-275

Franke, M. (2004) Competition between network carriers and low-cost carriers – retreat battle or breakthrough to a new level of efficiency, Journal of Air Transport Management, 10:15-21

Gillen, D. and Morrison, W. (2003) Bundling, integration and the delivered price of air travel: are low cost carriers full service competitors?, Journal of Air Transport Management, 9:15-23

Unknown Author (2004) A New Vision, Airline Business, March: 27-29

I wasn’t being nasty, just saying I can’t be bothered to do the legwork for you, so I gave you a suggestion rather than a definitive answer. Sorry for how it came over.

My 1st choice on my UCAS application 2 years ago was Air Transport Managment at Loughborough uni. I was really impressed by the open day, and the lecturers couldnt understand how i knew so much about aviation as a subject.

I was given a place, but at the last minute decided to do Geography, which personally i feel was the correct decision. Wouldn’t mind doing a 1 Year Air Transport Managment course in the future, if my plans to emigrate come to nothing!

They probably couldn’t understand you knowing so much because most of those joining the course have never even heard of journal like Flight International or Airline Business, let alone picking them up! I was the same, in the end I was banned from answering questions unless nobody knew the answers, which often they didn’t.

Loughborough is a fantastic university, are you doing Geog there or elsewhere? Lboro also do a post-grad aviation course. Or there is always Cranfield, but they have shot themselves in the foot with some employers by giving good references to bad students in order to increase their employment rate. One lecturer at Cranfield got drunk and admitted this to a colleague of mine, its not a good thing to do because employers won’t trust them in the future!

British Airways do Paris from GLA. Both BA and Air France do CDG from EDI.