Aer Lingus will go bust in two years, claims O'Leary
Michael O'Leary yesterday claimed that Aer Lingus "is going bust"(Dani Pozo/AFP/Getty Images)
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Friday May 08 2009
Aer Lingus chairman Colm Barrington has described Ryanair as the "most unhelpful" shareholder following another doomsday prophecy from Michael O'Leary for the flag carrier.
The Ryanair boss yesterday claimed the airline "is going bust" and would run out of cash within 18 months to two years. He also alleged Aer Lingus' base at Gatwick had been a "disaster".
Mr Barrington said if Mr O'Leary was so certain Aer Lingus would collapse, he should be selling his shares.
Ryanair owns almost 30pc of Aer Lingus, which it acquired at a cost of roughly €400m, at an average price of €2.40. It's now worth about €102m, while it's being carried on Ryanair's accounts with a value of about €100m.
Mr O'Leary said he would write down the entire value of the Aer Lingus investment to zero if accounting rules permitted him to.
He added that Ryanair had made formal complaints to the London Stock Exchange (LSE) and the UK's Financial Services Authority (FSA) within the past three weeks regarding comments made by Aer Lingus towards the end of December 2008 and in early 2009, when it stated it would make a profit this year. It is now expected to post a loss of about €110m.
The airline also reported an operating loss of €17.6m for 2008, before exceptional items. They served to catapult the pre-tax loss to €120m.
Abuse
Mr O'Leary said that Ryanair's accusations against Aer Lingus to the LSE and the UK's FSA are of market abuse by the flag carrier.
Mr Barrington also said, in relation to the Aer Lingus base at Gatwick, that Mr O'Leary should concentrate on running his own business.
"Our Gatwick base has only been open less than two months," he pointed out.
Mr O'Leary called again on the government to scrap the €10 travel tax and said the Dublin Airport Authority should be told to lower charges, rather than seeking to raise them.
Mr O'Leary maintained that scrapping the tax would result in Ryanair generating an additional two million passengers per annum in Ireland, and a further two million if the DAA reduced passenger charges by 30pc.
- John Mulligan
