28 August 2008

Aer Lingus starts bleeding again - Vulnerable to Ryanair?

Despite a turnaound that has astounded many - EI has slipped back into the red in H1 2008.

Dermot Manion has had his work cut out for him - far from the nice cushy life at EK but by all accounts he is doing a good job.

But Ryanair is now a big fish and despite taking a huge hit on EI's stock earlier this year they are a significant shareholder. MOL is likely to use this opportunity to strike and undercut the former national airline. He has the power and the cost base.

I think that the amount of the loss is not that great compared to others out there - but it shows how vigilant all airlines have to be on their costs. Here the Unions need to think if they need to give back more to keep the carrier's costs down.

Ryanair didn't hedge for 2008 and it has shown. EI needs to be smarter and as (now) the smaller carrier it needs to be religious in its approach to fending off the more dynamic and dare I say predatory FR.


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