Mystery over O'Brien's latest AL share buy
DENIS O'Brien has bamboozled commentators by splashing out €2.5m on another 1m shares in Aer Lingus.
Yesterday's spending spree brings his stake in the national carrier up to 2.28pc, valued at about €31m. He first entered the Aer Lingus fracas last October, buying up 2.1pc of the airline's stock in an attempt to scupper a hostile takeover bid from low-cost carrier Ryanair.
Ryanair's takeover attempt is expected to be shot down by the European Commission next Wednesday, leaving market sources puzzled as to Mr O'Brien's motivation for the latest share buy.
Some have suggested that he is trying to "even off" the purchase price of his Aer Lingus shares. Some 9.1m of them were bought at €2.95 in October, with 2m more bought at an average price in the €2.70 to €2.95 region, so yesterday's million shares at €2.50 a piece give him a better average buy price.
Others market sources ventured that Mr O'Brien's motivation was simply that "Aer Lingus shares are good value at €2.50". Indeed, by close of business yesterday he had already made a gain of 5c a share, or €50,000, on his latest addition (though he's down about €4m on his total Aer Lingus flutters).
The other theory was that Mr O'Brien was building up his Aer Lingus stock because he was expecting next week's EC decision to require Ryanair to sell off its 25.2pc stake in Aer Lingus, leaving the telecoms tycoon free to build up a substantial stake in the airline. However, several sources were sceptical about this, dismissing it as too far-fetched.
Aer Lingus is one of the most tightly-held shares on the Irish Stock Exchange, with just over 30pc of the shares in free float. More than 40pc of the airline is held by the Government, Aer Lingus trade unions and Aer Lingus pilots, all of whom oppose Ryanair's bid.
Meanwhile, trade union Siptu is to meet its Aer Lingus shop stewards on Wednesday to discuss a response to the airline's decision to set an August 1 deadline for implementation of a sweeping cost-cutting plan.
Siptu national organiser Michael Halpenny said he had also written to the airline twice last week to express concerns about Aer Lingus's staffing levels at Dublin Airport, which Mr Halpenny says are 50 to 60 people below previous years'. The company is expected to respond next week.
- Laura Noonan
