Ryanair

Bar the Bull

Bar the Bull

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Ryanair Offers to Buy Aer Lingus for EU1.48 Billion (Update2)
By Matthew Fletcher

Oct. 5 (Bloomberg) -- Ryanair Holdings Plc, Europe's biggest discount airline, offered to buy Aer Lingus Plc for 1.48 billion euros ($1.88 billion) to combine Ireland's main carriers and add long-haul routes to the U.S. and the United Arab Emirates.

Ryanair acquired a 16 percent stake and offered 2.80 euros a share for the rest of Aer Lingus, 12 percent more than yesterday's closing price in Dublin. The unsolicited proposal comes eight days after state-controlled Aer Lingus raised 644 million euros in an initial public offering,

Chief Executive Officer Michael O'Leary said Ryanair would reduce fares at Aer Lingus and use its clout to acquire planes at lower cost. The combined company would have 50 million passengers a year, helping it compete with British Airways Plc and its partner Iberia SA, which have 63 million.

``We think this is a good investment and we can make more money from Aer Lingus than leaving it in the bank,'' said Chief Financial Officer Howard Millar in a phone interview. ``Our plan is to operate as two separate airlines.''

Ryanair has a strategy of taking market share from national carriers, while defending its Irish market. Unlike Aer Lingus, Ryanair has no long-haul routes.

The offer ``represents a unique opportunity to form one strong airline group for Ireland and for European consumers,'' O'Leary said in the statement.

500 Routes

The combined group will operate on about 500 routes, competing on only 17, Ryanair said. Ryanair will combine purchasing with Aer Lingus to drive down fares and costs, and had about 2.2 billion euros of cash before buying a stake in the carrier, Millar said.

``We have the cash resources internally to fund this offer without returning to the market,'' O'Leary said in an interview with the state-owned broadcaster RTE, adding he didn't anticipate antitrust or regulatory difficulties. ``We've offered an all-cash offer for 100 percent of the airline, but we're happy if we get a majority.''

Shares of Ryanair fell as much as 4.3 percent and were down 2.9 percent at 8.45 euros as of 9:11 a.m. in Dublin. Aer Lingus stock surged 12 percent to 2.81 euros.
 
I'd be interested to hear the unions reactions to the takeover. I can't see this going ahead, if it does, I can't see it being to the benefit of travellers.
 
From The Irish Independent website...

The main trade union at Aer Lingus has slammed Ryanair's announcement this morning that it is launching a formal takeover bid for the airline.
SIPTU president Jack O'Connor said today that the proposed buy-out would be bad for the country and vindicated the union's stance in opposing privatisation.

He also said the Government should have seen the move coming when it decided to sell Aer Lingus to private investors.

The Labour Party, meanwhile, has called on the Fianna Fail-Progressive Democrats coalition to state what steps it intends to take to protect Aer Lingus from the takeover.

Party spokesperson Roisin Shorthall has described the Ryanair move as "a potentially disastrous development for the Irish travelling public".

She says it is exactly the sort of the situation the Labour Party warned could arise from the "ill-judged and unnecessary" decision to privatise the national airline.
 
Why not, Bar? Which regulator?

Aer Lingus is little more than a regional airline when viewed in an EU context. KLM was allowed to merge with Air France, and BA and Iberia are partners, so why not Ryanairlingus?
 
First thing he will do is sack any disabled staff lingus have....

has there ever been a less charming businessman? apart from the vile dixons/curries chain (who are finally getting their comeuppance for arrogance towards customers) Ryanair is the only brand I would NEVER use
 
From the RTE website:

Ryanair wants to buy Aer Lingus

05 October 2006 13:56
Ryanair has announced that it has bought 16% of Aer Lingus and that it intends to make an offer for all the other remaining shares in the airline.

Ryanair's Chief Executive Michael O'Leary said the offer represented an opportunity to form a 'strong airline group for Ireland and for European consumers'.

The airline said it would make an all-cash offer of €2.80 per share.

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It said the offer was conditional on it acquiring at least a majority of the shares in Aer Lingus.

If the deal went ahead, Aer Lingus and Ryanair would have more than 70% of Ireland's short haul market.

Speaking on RTÉ Radio's Morning Ireland, Mr O'Leary said it is a unique opportunity to put the two leading Irish airlines together in one strong Irish airline group which would be able to compete with the likes of Lufthansa, KLM and British Airways.

He said that, while Ryanair had made an offer for 100% of the company, he would be happy to get a majority of 50.1% and would be happy to work alongside the Government, which holds 25%.

Mr O'Leary added that any union arrangements existing in Aer Lingus would stay there, while Ryanair would continue its own direct negotiations policy.

He said he would have no difficulty in talking to union leaders, but added that Aer Lingus management would continue in its own right.

SIPTU critical of move

The General President of SIPTU, Jack O'Connor, has criticised the development, saying there were questions about how Ryanair's purchase of Aer Lingus shares was allowed to happen. He said it would do the opposite of improving competition.

Aer Lingus shares soared over 11.5% to stand at €2.80 after the offer from Ryanair was announced.

Aer Lingus this morning said it had no comment to make at this time.

The Minister for Finance, Brian Cowen, and the Minister for Transport, Martin Cullen, have said the Government will not sell its shares.

They stated that the Government remains fully and firmly committed to competition in aviation markets.


Dáil suspended over Ryanair move

The Dáil was suspended in a row over the announcement by Ryanair.

Opposition TDs had demanded time to debate the bid while the Taoiseach, Bertie Ahern, insisted it would have to wait until next week.

Mr Ahern said the Ryanair move on Aer Lingus was unexpected and it was a matter for the board of the airline to examine it.

He said it would need regulatory clearance from either the Irish authorities or the European Commission.
Click to expand...

I don't see the European Commission blocking a merger.
 
Cheers, Bar.

It is a surprising move which suits O'Leary's taste for setting cats on pigeons.

Your colleagues seem to think that is the main object of the exercise, but it's also true that Aer Lingus is providing stiff competition for Ryanair on certain routes. With the former you can now choose your seat on-line at the time of booking, which is a big plus and their fares are often similar to Ryanair's.

I can imagine Mr O'Leary would be pleased to have one less competitor to contend with.
 
The lads seem to think that it is a purely and simply a politically motivated bid. Such muscle flexing will give him clout when it comes to having a say at Dublin airport.

If you believe it is a ploy, now is the time to long Ryanair and short AERL.

Interestingly enough, Ryanair is trading 10c above the bid, so the market has factored in the possibility of another bid.
 
I am guessing that in the last ten years I have flown Ryanair 50 times. I have two recollections of the flight being late or cancelled. I have taken at least 100 Aer Lingus flights in the same period. I would say that at least 25 have been late.

In relation to the hostile takeover - this will quickly become a political issue and will be nixed by the ICA who will be seriously leant on by the Govt. If the bid succeeded by next May, then Fianna Fail will lose at least 4 seats North of the Liffey.

Only in Ireland; Part 11.

"Offering 2.80 for the shares is seriously undervaluing the growth potential of the airline" - Martin Cullen - Minister for Transport 5th Oct 2006.

This is the minister who floated the company at a valuation of 2.20 a couple of weeks ago.

I applied for a large amount of stock at 2.20 before the float - rejected for being late.
 
Originally posted by an capall@Oct 5 2006, 06:57 PM
I applied for a large amount of stock at 2.20 before the float - rejected for being late.
Click to expand...
Did you send your application by airmail? If so, I think we should be told which airline transported the missive.
 
Originally posted by an capall@Oct 5 2006, 06:57 PM
I applied for a large amount of stock at 2.20 before the float - rejected for being late.
Click to expand...
You were not alone in this respect as the whole offering was oversubscribed. The fact that you were too late would have been academic as many individual investors who applied before the acceptance date only received a fraction of what they requested.
 
I imagine that as far as the Irish aviation market it concerned this would lead to a monopoly . Thus the domestic competition authority is likely to intervene.
 
I have my doubts that Ryanair intend buying the airline. I reckon they are expecting a genuine takeover bid and that this is merely a speculative investment. Were another bid to come in from the likes of BA, the unions especially would be falling over themselves to line up with them inorder to avoid the prospect of the alternative.
 
Agreed Mel. It is an expensive punt though.

Only in Ireland; Part 12.

The Unions in Aer Lingus are pleading with a British carrier (BA) to take the role of white knight and defend a national institution from an Irish investor. The CEO of their new best friend is an Irishman who they emotionally detested and phsyically threatened a couple of years ago.
 
Originally posted by Grey@Oct 6 2006, 12:55 AM
Is there such a thing as the Irish aviation market? I am not being facetious.
Click to expand...
They claimed on Irish radio this morning that Ryanair and Aer Lingus are two of the most successful airlines in Europe.
 
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