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Dublin: 9 °C Wednesday 22 May, 2013

Varadkar outlines concerns about Aer Lingus stake sale

The Transport Minister spoke out about Ryanair’s bid to take over Aer Lingus this morning, saying the subject will be discussed at cabinet next week.

Image: Mark Stedman/Photocall Ireland

TRANSPORT MINISTER LEO Varakdar has said that the 25 per cent stake in Aer Lingus is for sale, “but it’ll be done at a time of our choosing, and for the right price”.

The Minister made the comments on RTÉ’s Morning Ireland this morning, where he outlined three major concerns he has about the proposal yesterday from Ryanair that it buy Aer Lingus for €694m.

Varadkar said his first concern related to competition law, as the European Commission had determined at an earlier date that Ryanair couldn’t take over Aer Lingus for competition reasons, while the UK is examining whether it can keep its existing stake.

He also has a concern about what’s right for passengers, and whether giving any group a monopoly, or a near monopoly, on the routes out of Ireland is a good idea or not.

His third concern is what’s best for taxpayers, and he said he has always taken the position that Aer Lingus is undervalued on the market, and this is proven by Ryanair’s bid.

Varadkar commented that “45 per cent of [Aer Lingus] is freefloat, Ryanair can buy up some of that freefloat to the extent that it becomes majority shareholder”, but it would encounter trade investigations at that point.

He concluded that the subject will be discussed next Tuesday at cabinet.

Yesterday, the board of Aer Lingus said that it considers that Ryanair’s offer to pay €1.30 for the 70 per cent of shares it does not own“undervalues” it.

This is Ryanair’s third bid for Aer Lingus, and the airline said that it believes circumstances have ‘changed materially’ since its first unsuccessful bid in late 2006.

Read: Kenny: Government ‘won’t be pushed into fire sale’ of Aer Lingus shares>

Read: Aer Lingus to Ryanair: Your bid undervalues us>

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Comments (31 Comments)

  • Only recently this clown Varadkar said the government wouldn’t take less than €1 per share for their stake! Now they’re being offered €1.30, and he’s saying it’s not enough! I’m not in any way advocating selling Aer Lingus to Ryanair, but this clown needs to be sacked very quickly! He’s becoming a huge liability!!

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  • I agree with what varadkar is saying, but I also believe we shouldn’t be selling in the first place!

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  • Think its incredibly difficult to get the right price given the economic climate we are in. It’s right we should have choice but, surely that’s about letting other carriers fly into Ireland’s slots under tight licenses rather than ‘owning’ a bit of an airline we have no real control over anyway. Posing the question – If we were absolutely adamant not to be stranded, or be at the behest of other carriers, maybe we should buy it back – or not have sold it off in the first place. Looks like we want the best of all worlds at present.

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    • Enough about the comparison to other countries. We are an exception in the EU. Apart from Cyprus and Malta, which are very small, we are the only true island nation. The UK has the Channel Tunnel and expectionally good ferry connections to France, Belgium and the Netherlands. In half an hour, you and your car can be on mainland Europe. Mentioning the BA buy up of BMI is not comparable. They still have easyJet and Ryanair to maintain competition. British people will always have choice of how to get off their island. If this goes through, we won’t.

      If Ryanair buy Aer Lingus, the only competition left is the ferries, and as we all know, they’re not anyone’s first choice. Three hours to Wales, seventeen to France and that’s about it. After that, you’ll have to fly with the one airline left, at an artificially high price. We need security and confidence that we can get away and that others can get here at an affordable price. Whatever about anything else, the Heathrow slots are a lifeline to this country. Heathrow, though in another country, is the gateway to Ireland. Through Heathrow, we are connected to virtually every corner of the world. If we lose that, we’re taking many steps backwards.

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    • Not sure why that replied to your comment, Martin!

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    • Donncha Ó Coileáin, well said, totally agree with you.

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  • Dave 21/06/12 #

    I am always baffled when the pro/anti Ryanair Aer Lingus debate comes up by comments? It’s irrelevant whether you’re a fan of either, anyone who thinks that it would be good for any company to have such a massive dominant position on our transport options out of the country is crazy. Do people honestly think that O’Leary who has to be admired as a business man is going to reduce fares even more when he has even less competition? No, he’s there to make money and that’s what he’ll do by pushing prices up because he’s your only option to get somewhere. People are getting their €2 Ryanair fares to London because Aer Lingus is there so if you want to keep getting the (sometimes) cheaper flights with Ryanair you’d better hope that they don’t get Aer Lingus.n

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    • Ryanair have confirmed their growth by slashing prices model has reached its limits and the only way to continue delivering revenue growth is to charge higher fares. Last year Ryanairs fares rose 12%

      http://www.aviator.aero/newswire/index.php/2011/05/ryanair-full-year-profits-rise-26-to-e401m-fares-rise-12-as-traffic-grows-8-to-72m/

      http://www.guardian.co.uk/business/2010/sep/12/ryanair-move-away-from-low-fares

      Who honestly believes they won’t do this with a monopoly on an island? Again can anyone not connected with Ryanair or likely to get a short term windfall on the sale of AL shares give just one logical reason supported by fact as to why a Ryanair monopoly is good for Irish citizens.

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    • paul 21/06/12 #

      @Economicopoly

      Of course its not good for us but its Capitalism, right? we’re supposed to think that this is the only and best way and your a commie If you think different or a Socialist (Nazi) If your in America. Neo Liberal policies all the way right? No?

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    • Monopolies are more akin to socialism than capitalism. Many “Capitalists” are really just people who believe in naked self interest regardless of the cost to others, so if adherence to the “rules” they rely on to justify excessive wealth suddenly require them to take a loss they have excuses for why those rules don’t apply to them at that time. Sad;y these ‘capitalists” are now above governance in that they are more powerful and can undermine government in ways governments can never undermine them, thus the global economic crisis and its harshest consequences been borne by those least responsible. However a competitive market is a hallmark of the capitalist ideology and it encourages an equality of opportunity to enter and compete which is alligned to democratic values. The results of allowing people compete are better prices for the consumer and a more effecient use of scare resourses as competition does not allow for waste or inefficiency.

      Reply
  • Micheal has us all talking about Ryanair again. Man is a marketing genius.

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  • I agree that with Ryanair you get what you pay for, and I have no problems with that on a short haul flight. But just imagine the Ryanair model being applied to transatlantic flights – no reclining seats means sitting bolt upright for 7+ hours; very little legroom if your over 5ft tall; and can you just imagine the in-flight entertainment!?

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    • Neil 21/06/12 #

      There are plenty who would put up with it if the price made the trip to Florida or wherever affordable for them.

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    • But Neil, Aer Lingus have already made it pretty damn affordable especially compared to many other options out there and I can’t understand why the Irish are so blinkered to that!nnWith air taxes, costs and fuel so high Aer Lingus has maintained lower fares then most of the competition and Ryanair will never better that, but they would increase baggage charges, check in charges, online fees, food charges, etc etc etc

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  • It’s blatantly obvious Ryanair are dieing to have Aer Lingus’ transatlantic capability, codeshares and heathrow slots. I say bleed them for a cool billion.
    I look forward to cheap RyanAtlantic flights..

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    • No way! Ever been on a Ryanair flight when smoke pours out of the cabin or the captain says sorry we have to turn back I forgot the paperwork or travel with a child and they tutt when you ask for a safety belt for them! Ryanair can keep its cheap, crap and unsafe planes and staff for short haul flights. I’d rather pay the extra for comfort, safety and pleasant staff who know what their doing. Keep it I say, let o’leary whistle

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    • Amazingly, I’ve never had a bad experience with Ryanair. Also, they have one of the most modern and safest fleets in the World and fantastic turnaround times. It is cheap and crap but you get what you pay for.. I personally don’t need sweeties, compliments and massages while I travel.

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    • @ Ryan,nnThats funny you should say that. I once sat on the tarmac in Dublin Airport onboard a Ryanair craft for an hour and a half while they fixed a faulty BACKUP air conditioning unit. Doesn’t sound like the Ryanair I know that you are talking about. People who complain about Ryanair should remember the phrase you pay for what you get.nnAs I said before, Ryanair buying over AL to run budget flights makes no sense. They fly to major routes with aircraft manufactured by Airbus, which are parts incompatible with the current Ryanair flight. The image, service and quality of AL will remain unchanged in a takeover. They will just make it a more streamlined and efficient airline.

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    • Also…where in the world did you get unsafe aircraft from? They use the latest generation Boeing aircraft and have one of the best safety records out there. Even Aer Lingus has had more and more severe incidents than Ryanair.

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    • John F 21/06/12 #

      Seriously Ryan, When was the last time you flew with RyanAir? Your comment is childish and pathetic, smoke pouring out of the cabin? Maybe you saw some condensation from the air conditioning system?, something I’ve witnessed on hundreds of aircraft. RyanAir have one of the largest and youngest fleets in Europe, but don’t let facts get in the way when you want to echo the media’s anti-Ryanair mantra!

      http://www.planespotters.net/Airline/Ryanair

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    • Aer Lingus and Ryanair in competition has given us competitive prices and choice. Everyone has their view on who they prefer to fly with, majority view Aer Lingus as a better standard of service, but its not the point. The point is you can chose as you see fit as it stands. Ryanair needed state intervention to dislodge an Aer Lingus monopoly, if they get a monopoly they will bleed any new entrant off the routes with their significant non irish revenue, look at what they did with Aer Arann, only a fool or someone that will get an instant financial windfall from the proposed deal would want 1 airline servicing the vast majority off flights on and off the island in a time (emigration, exports..) in which the people of this country need competitive prices and consumer choice more than ever.

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    • Any argument in favour of ryan atlantic or some other new services fails to acknowledge that Ryanair don’t need to eliminate competition to offer any new service to Irish consumers, Aer Lingus is not stopping Ryanair from a transatlantic service, they could have done that at any stage over the last decades as many US carriers have done. Aer Lingus offer some of the cheapest fares across the atlantic, significantly cheaper to fly NY – Dub as NY-Paris, many people on Aer Lingus on the atlantic are using it as a cheap way to Europe and then connect to their intended destination once they arrive in Dublin. Ryanair don’t need to eliminate competition to offer any new service, they can do it today if they wish, this is about making sure that you will have no choice and either do it Ryanair’s way and pay Ryanair’s price or take the ferry, surely most people feel the current situation is better than that.

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    • O’ Leary will sell most of the slots, worth around £400 million. American Airlines and Emirates and more want to buy more Heathrow slots but none available. He will re-locate most services to Stansted.

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  • paul 21/06/12 #

    I thought in a capitalist society you can go around buying what you like? I dont agree with it but its another load of shite invented by politicans because capitalism is flawed.(what we did with the banks is far from Capitalist ideals)

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  • O Leary for Taoiseach!!!

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    • M J Fox 21/06/12 #

      Because we don’t pay enough taxes as it is. Bring O’Leary in as Taoiseach and it won’t be long before we’re paying tax on the number of windows in our homes, car tax based on the weight of the car, and paying to use post offices, tax offices etc instead of their web sites.

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    • “We have to move away over the next number of years from being obsessed with having the lowest fares in the market,” Michael O’Leary.

      A Ryanair monopoly on an Island will lead to higher prices and no choice except fly the Ryanair way and pay the Ryanair price or take the ferry. Whether you love or hate either airline you currently have choice and their competition for each others customers means they either deliver lower prices or the lose business, all of these market dynamics are gone with a Ryanair monopoly. In a time where Irish Citizens need choice and competitive prices on air transport abroad more than ever (emigration, export led economic growth) we cannot have a Ryanair monopoly.

      This government is so inept they would probably go for it in exchange for alot less than they pay to cover the failed bets of speculative bondholders every other month but people should be aware that it is really not in their interests as citizens to allow one company (whoever that company is) to be the sole supplier of air travel to and from Ireland. People might say that some other airline will come in if prices rise but its very hard to dislodge a monopoly, Ryanair will simply lower fares until the new entrant loses too much money and retreats as they did with aer arann. Ryanair also needed state intervention to dislodge the Aer Lingus monopoly.

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    • O’ Leary says the government should not pay childrens allowance to people on high salaries and millionaires, but he still claims it for his children.

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    • He’s entitled to it Mark. He makes a good point in that it should be taxed. but the department sticks by the point that all children are equal and thus receive equal payments.

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  • Aer lingus flys to Nackhijoodfoo!!
    If Micka get control!! Neigh

    Reply

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