A few weeks ago, the Irish government announced it was ready to let go of its Aer Lingus shares. After years of never ending tergiversations, the Irish government eventually admitted that Aer Lingus wasn’t a leading European carrier and wasn’t likely to ever become one again. Reading the news, I pictured chanting angels slowly descending around Michael O’Leary as, after years of haggling, his airline was eventually free to take control of Aer Lingus. Well, I’m not sure about the angels, but for the rest Ryanair proved me wrong.
Actually, it wasn’t Ryanair who proved me wrong. I had just forgotten to take regulators into account. And clearly the Irish government is not ready to let go off the airline to just anybody. Irish Transport Minister Leo Varadkar made quite clear that Ryanair shouldn’t even try to bid as it would prove anti-competitive. Now, apparently, Ryanair is willing to let someone else take over Aer Lingus, but not before it settles scores with the airline’s management.
First it started, last week, by launching a virulent critique of the carrier’s results. The critique itself was part of an attempt to gather support among shareholders to demand a dividend from the company. Ryanair explicitely requested a €110 million from the €900 million cash reserves of Aer Lingus. But it did so while pointing out gross-mismanagement at the company. Namely, Ryanair reproaches Aer Lingus its frantic efforts to plug a €400 million deficit in its pension plan, partially resulting from a failed redundancy plan earlier this year.
No it’s not really surprising from Ryanair to hear of a general disregard for pension plans and employee management, however, what I fail to grasp here is the company’s underlying strategy. Is that Ryanair is having such trouble with Aer Lingus that it actually has to coerce management into doing its own bidding? Is it that Ryanair plans to sell its shares once a buyer comes forward and, meanwhile, is trying to take the money and run? Or is it that Ryanair still sort of wants Aer Lingus, but feels it would be better to make the company lose some financial value before Ryanair announces it will buy the Irish Government’s shares?