Aer Lingus links up with troubled United as Ryanair bid crumbles
Dermot Mannion, Aer Lingus chief executive, said the move created a new opportunity for the Irish airline
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TAKEOVER survivor Aer Lingus is entering into a "partnership" with United Airlines that will see the Irish airline's planes fly from continental Europe to the US for the first time.
The deal was announced yesterday afternoon, just hours before Ryanair's €748m hostile takeover bid dramatically crumbled after being rejected by the Government.
Described by analysts as a "huge thing for Aer Lingus", the United partnership will kick off in March 2010 with daily flights from Madrid to Washington.
Routes
The airlines hope to grow the deal to three Europe-to-US routes by 2012. These will all be served by Aer Lingus planes, staffed by specially-hired American crews and sold primarily by United under a 50/50 revenue-sharing deal.
Beyond 2012, Aer Lingus and United intend to set up a Europe-based joint venture company that can "further exploit" the recent easing of regulations governing flights between Europe and the US.
"We all recognise that the longhaul market out of Ireland is limited in size," said Aer Lingus chief executive Dermot Mannion. "This is creating a new opportunity for us to generate critical mass."
The initial operation will be served by three new planes that were originally ordered for Aer Lingus, but Mr Mannion insisted the new routes wouldn't be launched at the expense of additional transAtlantic routes for Ireland.
"Absolutely not," he said. "We have flexibility in terms of when we retire our existing fleet so we can grow our network outside Ireland and within."
Corporate planning director Stephen Kavanagh added that the United deal might also prompt Aer Lingus to increase its plane orders "above and beyond" the planes already en route .
Yesterday's announcement comes just days after Aer Lingus' new partner United posted quarterly losses of $1.3bn and said it would cut 1,000 jobs by the end of the year.
"It's not just United, the whole industry is going through a tough time in the US," Mr Mannion said. "I'm confident this is going to be a successful operation in the US."
For its first two years, the Aer Lingus/United partnership will be run out of a base in the US, with all staff recruited locally.
If the airlines follow through on their intentions to launch a joint venture, that company will be 51pc owned by Aer Lingus and based in Europe as "regulatory requirements are best served by having a European entity," Mr Kavanagh said.
Any joint venture would likely need the support of the airline's shareholders, Mr Mannion admitted. Asked if Ryanair was likely to support the initiative, Mr Mannion said he was "very confident" of achieving "very posited shareholder support".
Ryanair later issued a statement congratulating Mr Mannion and his team on "finding a partner which is even weaker and in worse shape than Aer Lingus".
- Laura Noonan
