However, before any initial public offering (IPO)the airline first has to resolve its running pay disputes. Staff claim that pay fell behind that of other airlines as a result of a freeze imposed in the 1994 rescue plan and want levels raised. A strike by cabin crew in October had already grounded the entire fleet.
Pilots are pressing for parity with their counterparts in British Airways, now a partner in the oneworld alliance. Arbitration is taking place and its outcome will determine the timing of the flotation. Credit Suisse First Boston and Davy Stockbrokers have been appointed as lead managers for the flotation.
New chief executive Michael Foley says there is no reason why the IPO should not proceed as planned before Easter. He adds that it is necessary for Aer Lingus to attract new capital to "facilitate the growth and development of the airline" and identifies the IPO as the "absolutely top priority".
The IPO should benefit further employees, who already own 5% of the company from a previous restructuring. They will receive another 9.9%. However Foley is not looking for a strategic equity partner. The bilateral agreements with American Airlines and British Airways, and its membership of the oneworld alliance, which Aer Lingus joined last June, "satisfy our appetite for the medium term," he says.
Another priority identified for immediate attention is the implementation of an e-business strategy, announced with the annual results. Foley says that it is critical for Aer Lingus to become a fully web-enabled company.
The 1999 financial results, when the finally emerged at the end of September, were boosted by strong traffic growth across the network taking passenger numbers up 13% to 6.5 million.
This was achieved largely through the addition of a fifth US gateway of Los Angeles - a sixth, Baltimore/ Washington was opened in September - and a new route structure for London, with Aer Lingus moving into London Gatwick and London City airports.
Foley confirms that the airline plans to rationalise the fleet to one aircraft type on the North Atlantic and no more than two types on its European services, but would not be drawn on whether this would mean a switch to an all-Airbus fleet, given the recent deliveries of a range of Airbus types.
Aer Lingus is also seeking to re-balance the fleet, with the objective of owning about two-thirds of its aircraft, to reverse a heavy emphasis on operating leases. At present, 22 of the Aer Lingus aircraft are either owned or on finance leases, with 16 on operating leases.
| Aer Lingus group results 1999 | ||
|
| $ million | 1998/change |
| Revenues | 1,250.4 | 2.6% |
| Operating result | 79.0 | 77.6 |
| Operating margin | 6.3% | 6.4% |
| Net profit | 55.2 | 79.4 |
| Net margin | 4.4% | 6.5% |
| NOTES: Group results for year-end December 1999 including discontinued businesses. Exchange at constant rate $1=0.93 euro | ||
Source: Airline Business
