Saturday, August 18, 2007

Why Aer Lingus is right

Aer Lingus are dead right to pull out of Shannon on a commercial basis, they have a finite amount of resources in particular slots into Heathrow and it is their responsibility to their shareholders that they seek to maximise the profit that can be derive from those resources.

So within those boundaries the Aer Lingus management have been consistent with what one would expect a public company. Those boundaries of course were set by the previous owners who in the unique environment of a privatisation had a chance to lay down some markers to shape the company's business into the future and indeed by retaining a significant share holding suggested, publicly at least, that they would continue to be active shareholders. Much along the lines of ethical shareholding whereby people use their portfolio to patronise certain types of business over others. The term "Golden Share" was pointedly used by the government over the course of the company being floated. I'm not sure for whom this share is now Golden, it sure ain''t the customers in the West and Mid-West, unless we're to look to the world of adult entertainment for inspiration.

Fact is that it isn't the decision that Aer Lingus has made that should be the focus of people's ire but instead the manner of the privatisation of the airline along with the Heathrow slots which has placed Aer Lingus in this situation. Yet, who has been asking the hard questions along those lines?

We're had RTe favouring the local FF apparatus in terms of coverage, yet never asking them what they personally had proposed or contributed during the Dail debates on the privatisation of the airline to ensure that the management couldn't make this type of decision. We've had no legal opinion produced by the government that demonstrates why some means to retain control of the Heathrow slots in the state's hands while floating the rest of the company.

The people of the Mid-West voted for FF in overwhelming numbers despite no significant inward investment into the region over the past number of years. And why are they treated so poorly you might wonder? Basically my view is if you continuously turn the other cheek you end up black and blue. I hate to use the analogy as it may suggest to some that I'm making light of a very serious social issue but much of the Irish electoral population behaves like an abused spouse, making excuses for why they are mistreated, continually turning blind eye to every indiscretion and persisting with a steadfast belief in every half arsed reason for why it happened this time and how next time will be different, and accepting that the other lot would be worse. Or so they are told.

As Fintan O'Toole has pointed out people get what they vote for; the fact that they don't bother to pay that much attention isn't really the politicians fault. In a democracy it is the voters who are ultimately the ones pulling the strings.

It isn't that people are thick just that they think they have more money than sense. What's the betting that we see an ex-FFer running as an independent in the Mid-West come the next general election on a platform of returning Aer Lingus to Shannon and the neglect of the region? And that we'll see the promise of one route into Heathrow in time for the 2009 locals.


atlanticconnectivityalliance said...


Gok Wan said... is their responsibility to their shareholders that they seek to maximise the profit that can be derive from those resources.

Don't you think they also have a responsibility to stakeholders other than shareholders, or is the notion of Corporate Social Responsibility sickening to you?

Dan Sullivan said...

I think if you read the post with an open mind you would see that the responsibility to a wider group of stakeholders was the government's which they abdicated by privatising the entire airline without making some provision for the slots.

Interesting that both comments miss the fact that the title of the post is meant to be somewhat ironic. Just goes to show people only read headlines.

Dr Gillian McKeith said...

Your opening premise, from which your argument follows, is flawed. Are you saying that only companies in which the Government has a partial shareholding have a broader responsibility than just maximising profits?

In your eagerness to pin some sort of blame on the Government, you seem to be obviating the board of Aer Lingus of all responsibility for the consequences of their activities. Business ethics have moved on since the the 1980s, you know.

Dan Sullivan said...

Gillian (how is the diet working out?) I actually don't suggest that only companies in which the Government has a partial shareholding have a broader responsibility than just maximising profits.

I don't even suggested that any companies have a broader legal responsibility than just maximising profits.

I did suggest that the government had (past tense) a responsibility which it has since abdicated. If people allow the government off the hook on that then they really are the mugs that the government appear to have taken them for. I suspect you're partially blinded by the belief that the state can't really be to be blame for this, it must be evil businessmen.

sarah beeny said...

I don't even suggested that any companies have a broader legal responsibility than just maximising profits.


amadan said...

Hi Danny,

There are many issues involved in the Aer Lingus and Shannon airport saga.

The idiotic government decision in privatising the company. The government were prepared to step in when Ryanair tried to buy out Aer Lingus, but obviously some commerical decisions are more equal than others.

The rational for the retention of the 25% shareholding, or the golden share as you noted, has not being explained by the government. Muppet Dempsey suggested it could be used for competition purposes as in the Ryanair case, but then why do we have a competition authority?

Aer Lingus management have a lot to answer for in relation to the damage to the Aer Lingus brand that this has done. How could they not have expected people to react the way they did? It seems like very poor management not to have a plan to reduce the negative publicity that would be created, which is something that the government should be concerned with as an investor in Aer Lingus. Management should be assessing risk and it looks like nobody in Aer Lingus is assessing any risk, similarly, they did not assess the risk of a Ryanair take over. And look how much that cost the company? The aspect of corporate responsibility does not exist ina low cost aer line. The obvious aim is to maximise profits, however where one of your largest shareholders is a country, then surely there is some shareholder responsibility.

I would love to see the the abused Mr/Ms Ireland have the choice of a non-abusive spouse, however the selection of spouses available does not look comforting.

Anonymous said...



Anonymous said...

Good day !.
You may , perhaps very interested to know how one can collect a huge starting capital .
There is no initial capital needed You may begin to get income with as small sum of money as 20-100 dollars.

AimTrust is what you thought of all the time
The company incorporates an offshore structure with advanced asset management technologies in production and delivery of pipes for oil and gas.

It is based in Panama with structures around the world.
Do you want to become an affluent person?
That`s your choice That`s what you desire!

I`m happy and lucky, I began to take up income with the help of this company,
and I invite you to do the same. If it gets down to choose a proper companion utilizes your money in a right way - that`s AimTrust!.
I earn US$2,000 per day, and my first deposit was 1 grand only!
It`s easy to get involved , just click this link
and lucky you`re! Let`s take this option together to become rich

Anonymous said...

You may probably be very curious to know how one can manage to receive high yields on investments.
There is no need to invest much at first.
You may begin earning with a sum that usually goes
on daily food, that's 20-100 dollars.
I have been participating in one company's work for several years,
and I'm ready to let you know my secrets at my blog.

Please visit blog and send me private message to get the info.

P.S. I make 1000-2000 per day now. [url=]Online Investment Blog[/url]