This article is from page 10 of the 2006-07-10 edition of The Clare People. OCR mistakes are to be expected so download the original SWF or the rendered page 10 JPG
THE FLOTATION of Aer Lingus could come with a knock-down price tag, according to international aviation analysts.
The Government last week cleared the way for a September public offering of the airline. But it now appears that estimates are putting the price of the airline much lower than the €1 billion plus, which was the hoped for price tag.
Airline analyst with London company, Dresden Kleinwort, Mike Powell, said that the Government would face a “tightrope walk” in selling Aer Lingus, with a tough time ahead for the Initial Public Offering (IPO).
Aer Lingus will be coming on the heels of the troubled experience of Air Berlin, whose shares continue to trade below their sale price. They were floated on the stock market in May.
“Look how difficult it was getting away the Air Berlin IPO,” said Powell. “It’s not going to be an easy IPO for Aer Lingus. You cannot overprice an airline offering, particularly against a background of rising oil prices.”
Another analyst, Florence Tassan of Société Générale in Paris said that with oil prices remaining at above 70 dollars a barrel, it will be vital that the sale is keenly priced.
“Investors will be cautious and it is likely that the Aer Lingus valuation will be below the valuations for Air Berlin.”
That level of valuation would see the Irish airline floated at around €800 million, below the hoped-for €1.1 billion. On the positive side, traffic figures for airlines such as BA, Easyjet and Air France show that the industry is experiencing its best conditions in six years.
The warnings on overpricing have come just days after workers at Shannon and Dublin staged a protest against privatisation, which saw services in both airports stop for an hour. Just two flights were affected in Shannon, with one flight to London leaving on time, despite delays in check in, and a flight to Chicago leaving an hour late.
Shares in the airline will be aimed primarily at institutional investors, but there will be some shares made available to the public. But to guard against any repetition of the Eircom privatisation in 1999, a minimum investment of €10,000 will be required. Last year, Aer Lingus chairman, John Sharman, said it was right that the airline’s passengers be allowed to invest in the airline.