Ryanair: Aer Lingus bid ‘unlikely’

AER LINGUS will this week outline its plans for hundreds of job cuts and the possible scrapping of its Shannon/New York route as Ryanair quashes rumours of a third bid.

Ryanair chief executive Michael O’Leary wasreported as saying he expects Aer Lingus to launch a rights issue within the next 18 months, which would enable Ryanair to become the majority shareholder without the need to launch a third bid.

“We’d use our rights and end up as the majority shareholder,” Mr O’Leary is reported as saying. However, he said last night the airline’s position on Aer Lingus is it is “highly unlikely” to make a third offer.

“Aer Lingus would now be profitable, growing and creating new jobs if the Irish Government had accepted either of Ryanair’s two previous offers, instead of which, sadly, Aer Lingus is suffering record losses and will shortly announce a huge redundancy programme as it continues to be mismanaged and controlled by its Government and trade union appointed board,” he said.

Ryanair owns 29.82% of Aer Lingus, while the Government has a 25.11% shareholding. Mr O’Leary was also reported as saying that as the economic context worsens, Aer Lingus may find its challenges difficult to address, possibly ending up with a negative cash flow.

Aer Lingus will this week announce details of its cost-cutting programme. It is expected that between 500 to 800 jobs will be cut from its 3,900 strong workforce. Remaining staff are expected to be asked to take a 10% pay cut.

Shannon Airport will also be waiting anxiously to hear what Aer Lingus’s plans are for its Shannon/New York route. The airline said this route is “under review”, and there are fears that the airline will scrap the route, at least for the winter.

Speculation is also mounting that the airline will scale back its New York/Dublin service to one flight a night.

Bloxham analyst Joe Gill said Aer Lingus needs to slash 800 jobs to rein in operating costs. Mr Gill also said: “Having burned through almost €500m in two years Aer Lingus has to control the quantumrequired to fund needed changes.”

Meanwhile, Ryanair said its passenger numbers rose 17% in September to 6.1 million, from the year-earlier month.