UNIONS AT Aer Lingus say Ryanair’s proposed €1.30-a-share bid for the company fundamentally undervalues the airline and claim the credibility of Ryanair’s intentions “are doubtful at best”.
In an opinion document written on behalf of the unions’ central representative council at the airline and due to be made public this week, they outline their arguments on why staff should reject last month’s offer from Ryanair.
The document, seen by The Irish Times, says Aer Lingus has a brighter future and greater returns for all stakeholders as an independent and newly configurated company, and that the offer “ignores fundamental changes in the cost structure at the airline”.
The unions say Aer Lingus has put in place an operating cost structure they believe is appropriate to grow its offering over the longer term. “The timing of the bid is designed to take advantage of the fact that much of the structural and cost readjustment work has been done, but the benefits are only now flowing through to the financials and, as such, have not yet been fully reflected in the share price.
“The Aer Lingus Greenfield programme, introduced in 2010 and which has been engineered by management and negotiated with unions, has created a transformed cost structure.
“Up to the end of the first half of 2012, the programme has resulted in savings of €34 million in non-staff and €61 million in staff costs. These actual savings are well in line with the initial target of €97 million to the end of 2012.
“For Ryanair in its offer document to gloss over this, and lump trading losses in 2008/9 etc into one figure summarising the financial picture, is worse than disingenuous.”
The document claims the current share price is being held back by the pensions deficit and a lack of liquidity, but that both issues “should be resolved in late 2012 or early 2013”.
In terms of the 23 landing slots at Heathrow Airport held by Aer Lingus, the unions state that given the blockage by the UK government of the case for building a third runway at Heathrow, congestion there is likely to worsen and landing slots will increase in value.
“While precise valuations are difficult to make with confidence, using the pricing from the Continental Airlines purchase of four slots for £105 million, reports would estimate that the Ryanair offer undervalues Aer Lingus.
“This current Ryanair bid, at €1.30 per share, we believe, almost covers the value of the Heathrow slots, but in doing so attributes zero value to the newly configured and profitable company and other assets.”
On potential competition challenges involving the European Commission, the unions say that Ryanair has not given Aer Lingus shareholders or employees any information as to the remedy package it proposes to ensure the offer is approved by the European Competition Commission, despite the offer having been made more than a month ago.
Last week Aer Lingus said it was expecting a preliminary decision from the European Commission on Ryanair’s proposed bid for the company in the next four to six weeks.
