The incoming chief executive of Aer Lingus has warned the investment community will not be interested in the company unless it develops a long-haul network to places like Asia and the Middle East.
Dermot Mannion, who takes up his position in early August, said because of competition from Ryanair and other airlines, growth on short-haul routes was likely to be very limited.
Yesterday it emerged that one of Aer Lingus's short-haul routes, Copenhagen, may be scrapped. The airline is currently not accepting winter bookings on the service and a spokesman said its future was being examined.
In a separate development, the middle-eastern airline Gulf Air is expected to announce a new Irish service to the Middle East at a press conference this morning in Dublin. Mr Mannion said: "The investors need to see potential, otherwise they will simply not be interested. So we have to show we have a viable growth strategy based on long haul".
Mr Mannion said Aer Lingus needed to feed traffic into larger networks and this might be done via partnerships with airlines in the One World Alliance.
He said the airline might also need to link up with an intermediate airport in the Middle East or Asia, like Dubai or Singapore. "That is the business I know. That is where the growth is," he said. Among the airlines in the One World Alliance are Cathay Pacific and Qantas.
Mr Mannion also revealed that that a majority stake in the airline is likely to be sold in the second half of 2006. "I anticipate it will be 2006, most likely the second half of 2006. This is not an Aer Lingus position, this is what I anticipate the Government wants to do. It is a tight time schedule to be honest, but it probably needs that kind of impetus," he comments.
Mr Mannion is a former executive with Emirates, the Dubai-based airline which is one of the largest carriers in the world. He recently left his position as president of group support services.
Mr Mannion, who originally hails from Sligo, has also acknowledged that Aer Lingus has fallen behind in getting work practice changes agreed. However, his arrival in August is likely to speed up negotiations. The airline was forced to cancel a route to Florida two months ago after it failed to secure concessions from cabin crew.
The airline's trading performance has been disappointing in the first few months of the year, although it has picked up strongly in recent weeks. The airline's chairman John Sharman has said the first three to four months of the year are traditionally lean periods for airlines.
Mr Mannion said the method of selling Aer Lingus next year was still open to debate. "I think all the parties have to be pragmatic. The timing of this is all important. If the stock markets are doing well, are very buoyant, flotation will be the right thing to do. But if the markets are not doing well, then a private placement may be the route. I think the Government should keep its options open right down to the 11th hour," he explained. In the meantime, he said his job was to create a "value proposition" for staff and investors.
