This Time Around, Gov't Willing To Talk
What a difference two years and a deep recession can make.
In 2006, Irish low-cost carrier Ryanair
made a run at acquiring its only major domestic
rival, Irish flag carrier Aer Lingus, for about 1.5
billion euro. The economy was booming, Ireland was awash in tax
revenue... and the government, unions, management and shareholders
of Aer Lingus all hated the deal, so it went nowhere, even though
Aer Lingus was losing money.
The Wall Street Journal reports Ireland is now sharing in the
deep worldwide recession, the government is running deficits, Aer
Lingus is still in the red, and Ryanair is back again. But this
time, the offer is only half the amount offered two years ago.
The unions and executives of Aer Lingus are still opposed... but
this time around, despite the much lower offer, the government says
it will look the deal. Holding roughly a quarter of the company
shares, the government's position is seen as crucial.
Ryanair CEO Michael O'Leary points out that economic upheaval
and continuing consolidation in Europe's airline industry leave no
chance for Aer Lingus to remain viable on its own. Amid concerns
for consumers, he points out that Aer Lingus has increased fares
and added fees since his last offer.
"The world has changed" since 2006, O'Leary said. "We think what
will be most influential to EU regulators will be the Irish
government's attitude... Our focus this week will be on persuading
the Irish government and Aer Lingus the benefits of the deal."
He adds employee shareholders would get more than 137 million
euro in cash, and the government more than 188 million, if the bid
is successful. He also thinks he can create a thousand new jobs
over the first few years of combined operations.
Ryanair has asked for a meeting with the board of Aer Lingus as
soon as possible to explain its position.