Private Investor: Will the sky be the limit for Aer Lingus?
Saturday 02 September 2006
If nothing else, the news that Aer Lingus was to be privatised by the Irish government at least gave British Airways shares a fillip. This week saw them well and truly bust through the £4 mark, a remarkable turnaround from their post-9/11 nadir of under a pound. The brave, or far-sighted, bought lots then. The timid, such as me, bought a few at those levels, partly on the grounds, as I recall, that I didn't want to see the terrorists destroy the international travel industry.
But still, no one in their right minds thinks that aviation is a good investment, do they? The answer to that is, of course, that it usually isn't - the history of the industry is littered with failed names, from Pan Am to Swissair - so putting your cash into an airline is a worrying thing. Yet, as I have learnt with my small holding in British Airways, fortune does sometimes favour the bold.
As a hedge to my holding in BA, however, I also decided to buy a few shares in easyJet. That, too, has had its ups and downs, with the latest incredibly restrictive baggage restrictions doing disproportionate harm to the "budget" airlines, which need passengers on and off their planes very quickly so that they can turn them around in 20 minutes or so. The more mucking about there is with bottles of shampoo at the security gate, the slower the turnaround and the harder it is for the likes of easyJet and Ryanair to operate in their ultra-efficient manner. So now, my shares in BA, less susceptible to such changes because of their much broader international base, look like a hedge on my investment in easyJet. Funny old world.
Which brings me back to Aer Lingus. Privatisations are increasingly rare, and cross-national ones were never terribly common anyway, and never that juicy. Unlike the British state, our European partners didn't seem to think that it was their duty to guarantee investors an instant profit on every single sell-off. I still have the shares I bought in Deutsche Post, and while they've been OK performers by European standards, they were no bonanza.
So, even though it will cost a minimum of about £7,000 to get a piece of the Aer Lingus action, a substantial sum, the offer will at least be open to punters, and not just available to the City professionals . There's obviously no hurry on this, but the shares are going on sale at the end of next month, and it should be worth giving Aer Lingus the once over. And there are some interesting factors to consider in the story.
First, the timing isn't especially suspicious. Indeed, in the wake of 7/7, the announcement isn't that propitious. This is no panic sale, because the privatisation of the Irish flag-carrier has been on the cards for ages, and was actually held up by a series of wrangles between its management and the Irish government.
Second, the short-term reason why Aer Lingus is going to the markets is to pay for some new planes. Perfectly reasonable, and, longer term, it should generally be able to raise capital more flexibly when it's listed. Willie Walsh's management of the airline got costs under control (he's now happily at BA).
Third, there's the Irish economy. Maybe the best years of the Celtic Tiger are already behind it, but the great leap forward, to borrow another Oriental concept, has really pushed the country into the premier league. It still takes some getting used to that Ireland is now one of the wealthiest nations in Europe, per capita, and while its economy might be affected by the usual ups and downs of the trade cycle, it is unlikely to drop back to its old depressed status.
There are risks though. Aer Lingus nearly went bust after 9/11 because of its over- reliance on its US routes. It is, so some say, pulling out of the Oneworld alliance (with British Airways, American Airlines and Qantas, among others). And it has an odd relationship with Aer Rianta, the state- owned body that has been the holding company both for Aer Lingus and Ireland's airports (compared with the rather antagonistic relationship between BA and BAA, say). It is still small in global terms, and maybe only sheer bulk can protect you against the commercial effects of terror.
Experience of past Irish privatisations will probably mean that the float isn't too underpriced, so not such a tempting bargain. For the brave, Aer Lingus might be worth booking a flight on. I'll be asking for the forms.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 iOS 8 apps and features: eight iPhone settings you need to look at after you install update
- 2 Kim Kardashian 'nude photos' leaked on 4chan weeks after Jennifer Lawrence scandal
- 3 'F*ck it, I quit': KTVA reporter Charlo Greene quits live on air in spectacular fashion
- 4 Scotland could still declare independence – even without referendum, says Alex Salmond
- 5 Hitler’s former food taster reveals the horrors of the Wolf’s Lair
Scotland could still declare independence – even without referendum, says Alex Salmond
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Hilary Mantel 'should be investigated by police' over Margaret Thatcher assassination story, says Lord Bell
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Plebgate MP Andrew Mitchell called officer a 'little s**t', claim court documents 'exposing ex-Chief Whip's 'record of abusing police'
Archbishop of Canterbury admits doubts about existence of God
iJobs Money & Business
£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...
£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...
Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...
Day In a Page
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize