Aer Lingus sale – just another robbery by the corporate cabal
By Liam Deegan
WHEN ENDA MET WILLIE
Isn’t it ironic that Enda Kenny and IAG’s Willie Walsh who were in Davos together are now arguing the toss over semantics of the proposed sale of Aer Lingus? Enda Kenny is being the dutiful leader by “questioning” Willie Walsh about what assurances he will offer regarding jobs, pensions, etc, however the reality is that IAG will give all of the assurances that Kenny wants to hear but like any corporation will ignore them after the sale has gone through because cash is king and profits are everything.
Enda Kenny and this government are set on selling Aer Lingus no matter how much fighting talk you hear coming out of their mouths. This has been a plan for a long time as the Troika had made it clear that every state asset that can be sold off, will be sold off regardless of the sanctity of the asset.
Whether we still see Aer Lingus as a national airline is subjective and a matter of personal opinion but ask anyone who has ever waited at a departure gate in some far flung country how they feel when they see that green shamrock pull up to the gate. It’s like you are already at home and this is given more effect when you hear that Irish lilt from the cabin crew as you are greeted at the cabin door. We will always look at Aer Lingus as OUR airline even if it isn’t the case due to outside investors taking chunks of it out of the State’s hands.
IAG is offering €1.3 billion for Aer Lingus and that sounds a lot but that offer is for lock stock and barrel including the Aer Lingus’ fleet of Airbus aircraft which has a book value of €660 million euros, the facilities including desk space in all of the major terminals, the routes, the ramp equipment, the goodwill, the €0.5 billion Euro in savings that Aer lingus has in the bank, the property that Aer Lingus has invested in and owns but what really adds to the value and is the sweetest prize for Willie Walsh and IAG is that Aer Lingus own 23 slots at the world’s third busiest airport. Deloitte has recently valued the slots at between €30m and €40m each, meaning the slots alone are worth about €900m on their own.
Already the maths add up to over €2 billion worth of assets and this government want to sell a business that is growing exponentially at 6.8% per year. Ryanair have to reduce their shareholding to 5% this year and therefore get their money back with a small profit but that will leave the door open for an airline like Emirates to increase their investment which is something they have been keen to do for a long time and adding more backup to the reserve in the bank as they are likely to pay much more per share.
There is absolutely no business sense in selling off the 25% state shareholding that we own for a lousy €300 million in order to pay the bondholders back quicker and that is the nub of why Aer Lingus is being sold of to a vulture fund. It isn’t being sold so that jobs can be created, it is being sold knowing that jobs will be lost and that according to sources will add at least one thousand people to the dole queue and add an estimated €20 million Euro to the social welfare bill per annum, so where does it add to the saving or profit for the state? Instead of making money we will lose as the profit from the shares will be eaten up over time paying out social welfare to the staff and at the end of it we are left with nothing!
Selling Aer Lingus off to the lowest or any bidder because the Troika have insisted that the bondholders be paid back isn’t a good move from a government point of view unless there is a reward in it for them. There is definitely going to be no reward for the people who really own the shares which is the people of Ireland and you can be assured that you will be reading about the scandal of the Aer Lingus sale in years to come.