Aer Lingus (EI) executives are concerned the planned sale of the Irish governmentâ€™s 25% stake will put its profitable business model at risk.
Aer Lingus A330-200. By Rob Finlayson
Aer Lingus (EI) executives are concerned the planned sale of the Irish government’s 25% stake will put its profitable business model at risk. EI reported a net income of €71.2 million ($95.6 million) for 2011, up 65.7% from a €43 million net profit in 2010 (ATW Daily News, Feb. 29).
The Irish government last week announced plans to sell its 25% shareholding in EI as part of a €3 billion disposal program of state assets per a bailout agreement with its main lenders—the European Union, European Central Bank and International Monetary Fund. The country, which received an €85 billion aid package in 2010, said it would dispose of its EI stake when market conditions are more favorable for the airline.
“The sale [of the 25% stake in EI] is a matter for the government, but at Aer Lingus we would like to stress that our success is very much linked to building connectivity and partnerships with multiple airlines,” EI head of communications Declan Kearney told ATW. “Ireland is an island and we see it as our primary mission to connect Ireland with the world. If the stake is sold in a way that is offensive to any of our partners, that would damage our business model and the connectivity of the country,” Kearney said.
EI left oneworld in 2007 and since has extended its network through codeshares with airlines across all three alliances: Air France KLM/SkyTeam, British Airways/oneworld and United Airlines/Star Alliance. It also has a sales agreement with JetBlue.
Ryanair (FR), which is EI’s largest shareholder with a 29.8% stake, said the government should sell its stake to FR, The Irish Times reported. FR has launched two unsuccessful take-over bids for its smaller competitor in the past.
“If the Irish government had any sense they would sit down and ask what is best for Ireland Inc. going forward. It is clearly to merge the two Irish airlines,” CEO Michael O’Leary said. “If it is not sold to Ryanair, if it is sold to anybody else, it is inevitable that Aer Lingus will be broken up because everybody else only wants certain bits: the Heathrow slots and maybe the long-haul. Nobody wants the short-haul, because they will have to compete with Ryanair.”