Was Manion wounded by the last Ryanair's last Takeover attempt? Image ©TWC 2009

Is Aer Lingus CEO Dermot Mannion preparing to leave?

 UPDATE: 06 April 0600 LON: 

Aer Lingus has annouced that Mannion will be leaving the airline with immediate effect, and that Chaiman Barrington will hold the interim responsibility.

 In today’s Sunday Business Post, it is being reported that Mr Mannion is “preparing to leave the airline”.  TWC tried to get independent confirmation from Aer Lingus PR, where were unable to reach anyone for comment.

It has not exactly been an illustrious couple of for Mannion since taking the helm at Aer Lingus.   The latest takeover attempt mounted by Ryanair did not succeed in taking the airline, but it may have well wounded Mr. Mannion.   Not to mention the latest dismal earnings reports, and the fairlure some of it’s new long-haul strategies to materialise a much needed profit.

Of the more colourful moments of the last takeover bid was the request of Mr Mannion for a “golden parachute” in the form of compensation in the event of compensation in the event of constructive dismissal, nearly unavoidable if Aer Lingus were to be takeover.   After this new clause in his contract was exposed, by a suspected Ryanair leak, Mannion took the only honourable option and asked to have that removed.    (Small side note for our UK readers:  Sir Fred, did you hear that?)

That said, he did succeed in defending the carrier twice from the hands of O’Leary and Ryanair.   In addition, he is to be credited for seeking out the new codeshare agreements with UA on the DC-Madrid, and the JetBlue codeshare partnership.

Will his departure put Aer Lingus in a weaker position? 

Overall, we don’t think it could makes things much worse. At the moment, Ryanair has a bit of time before it can begin the process of another takeover bid.   So there is some breathing room here for the airline’s Board of Directors to locate some top talent.

Readers: Your chance to play “fantasy casting” for new EI CEO:

While we have our picks of who we would cast in the role of the new Aer Lingus CEO, frankly it it is more important to us to hear what you think.  So how about it?  Who would you replace Mannion with?  There is a lot of top talent out there at the moment, but will they go for such a mission impossible as Aer Lingus? 

A bottle of fine John X. Merriman Rustenburg goes to the first person who correctly posts the what will eventually become the correct answer.*

*system time prevails, and all decisions of TWC judges are final.  Shipping and handling included, except where prohibited by law.

Blogroll for this post:

http://www.thepost.ie/post

http://www.rte.ie/news/2009/0405/aerlingus.html

Not since Silverjet's introduction of "Women Only" Loos has there been so much to discuss about an in-flight powder- until today.

Until the now defunct British all-business class airline Silverjet installed “women only loos,” there was really nothing new to write about when it cam to the normal onboard experience of using the lavatory  At least Silverjet attempted to do something new, innovative, and entertaining with their offering.  Then today, Ryanair’s boss suggested that the potential for “spending a pound [sterling]” to go take care of your business might be a better way to go.

There is a lot I can say about Ryanair, and most of it would sound like it was coming out of the mouth of Mr. Michael O’Leary himself.  My diatribe would be full of colourful references of how the airline has treated me and the references and would have to be as blue as O’Leary’s Irish eyes.  The one thing that you do have to respect about O’Leary and his team is their insatiable hunger for public relations attention of any kind.   

So after a week that gave us the announcement that Ryanair would abolish airport check-in desks completely and require passengers to check-in online for all flights, as well as the now classic exchange between Ryanair’s Technology Support team and a passenger, it came as no surprise that we had not seen the last from the man who has been dubbed “The Mouth” and his team.

So this morning, during an interview with the BBC O’ Leary said that the airline had also looked at the possibility of installing coin slots on its toilets, “so that people might actually have to spend a pound to spend a penny in future”.  When the reporter further questioned him about what passengers without any cash would do when they required the toilet, he responded that he didn’t think there was “anybody in history that has got on board a Ryanair aircraft with less than a pound”.

Now, Mr. O’Leary knows better.   You cannot even get a license to run a restaurant in the EU unless you have provided the appropriate number of toilets for the number of potential patrons you have.  In addition, aircraft Layout of Passenger Area), or LOPAs have the same requirements.    This is just basic health and safety mathematics.    He and his team know that this plan is ludicrous, and he knows that it even borders on the illegal.   Yet, still there he is with the inflammatory statements. 

The one thing that you have to admire about Ryanair is that they will sell you a seat to X, and tell you no lies.   The seat is just a seat, and the credit-card surcharge to purchase the ticket, the extra money for the baggage, and your soda, are all optional extras.   Well, I don’t know about you, but my need for an in-flight lavatory is not an optional extra.   So I am sure to make up for that, he will find a way of adding a “convenience charge” for checking in online. 

There is no question that Mr. O’Leary is a sharp man with a business acumen that borders on ruthless.   It strikes me that he has never really left his roots of selling newspapers at the corner shop, where he claims to have started. In essence isn’t Ryanair a flying newsagent?   “Okay, so that is a copy of The Times, €1.00, a candy-bar €2.20, a cola € 2.25.  So that’s 5.45, plus and extra €1.00 for the directions to the nearest public convenience.  That will make it €6.45 then.”

Frankly, we suggest for our comfort, and for comfort and safety of those sitting around the airline business, that Mr. O’Leary purchase a one-way ticket to somewhere suitably warm… and stay there.

Executive Summary

• There will be wave of additional industry consolidation in Europe over the next year
• Pension Underfunding is playing a key issue in failed merger talks from BA/Iberia to even BA/Qantas.  While it is talked about as “valuation issues”, one of the largest is pensions and benefits
• While the EU Competition Commission is not likely to have changed its view on EI/FR, another suitor could put together a new bit Irish and EU regulatory backing
• Failed startup carriers like Silverjet and Eos may have been underfunded, but they avoided some of the legacy cost issues now plaguing the industry.
• BA needs to gain approval for its Merger with American Airlines- which we support fully.  That union is becoming even more important as the economic climates- and cargo and passenger numbers fall
• There are parallel lessons for the airline and auto industry when it comes to organized labour.

To say that Aer Lingus has been on defense as of late is an understatement.   I am personally impressed by both the airlines management and Irish Governments handling of the Ryanair bids, with the exception of the golden parachute for senior execs, that was later retracted.   Today there is even rumour of fresh takeover talks from the Merrion Stockbrokers team.  

 No potental takeover bid can be successful until the potential suitor has  an answer for what will happen with under-funded pensions and long-term labour contracts.  Until this happens nearly all  airline merger talks will end in tears.

In the case of Aer Lingus, the Irish State should not be left holding the bag for the debts, Alitalia style. Nor should the good people of Ireland need to face up to what US Authorities did with United Airlines in 2005, where the Federal Pension Guaranty Corp took over the airlines pensions for an exchange in a stake in the new United Airlines. 

There are some also some new harsh realities out there that airline labour needs to face up to.   No where is this more true than at Air France where pilots routinely appear to strike due to minute changes in retirement dates and work rules.

This is a now all too recurring theme in the airline sector, as earlier this week BA was said to have been valued below fellow oneworld partner Iberia.   One of the key reasons for this financial faux-pas is that BA owes its pension fund a good deal of cash and is not current with contributions.   While Walsh is out there claiming the any deal that does not value BA above Iberia is “not acceptable” to BA shareholders- why are those same shareholders not demanding answers on the pension underfunding?

 I am no fan of these pension obligations, and were I a shareholder I would be asking management some serious questions about how they are going to solve this pension shortfall, or ultimately it is not the shareholder, but rather the EU taxpayers that will start footing the bill.

 One of the reasons that we as consumers should be sad to see some airlines like Silverjet, Eos, and Sterling go is that that they knew the secret: don’t create a labour contract or pension plan that you cannot afford.  Instead, be good to your employees, and create an innovative, agile, and fun environment in which to work.  We feel that Virgin may well have the right balance here at the moment.  In addition, American Airlines has managed to create through shared-sacrifice a stronger relationship with its organized labour, at the cost of ousting of their former CEO (Bob Crandall) in order to regain credibility.     

This bring me back to a key point that I plan to continue supporting which is the AA/BA anti-trust application should be given fast track approval by the EU Competition Commission, as they currently are in a position to make a merger work.   They have the cash, the teams, and will be able to get concessions to harmonise workforce rules.  These are going to be keys to long-term viability.   Other truly viable applications should also be given the same treatment.   Ryanair and their bid were unrealistic and bad for EU consumers. 

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