Looking up at Aer Lingus

THINGS APPEAR to be looking up for Aer Lingus. Its franchise partner Aer Arann survived examinership, although it was
touch and go for a while during the crucial High Court hearing on Wednesday.

This relationship is due to be extended next Spring from five to seven aircraft. Earlier that day, Aer Lingus boss Christoph Mueller told reporters on the fringes of an Ibec conference that it would make a profit this year. This isn’t a surprise – it has hinted as much in previous market updates. But it’s welcome news nonetheless given the dire economic backdrop, the volcanic ash disruptions, Aer Arann’s difficulties, and the effect that the threat of industrial action by cabin crew must have had on bookings. A trading update, due this morning, should shed more light on its finances.

Mueller said there is "very little civil servant mentality left" in Aer Lingus. "You really have to look for it," he added. This is good news and will no doubt please his largest shareholder, Michael O'Leary and Ryanair. Also on Wednesday, at a conference in New York, British Airways boss Willie Walsh namechecked Aer Lingus as a likely consolidation target along
with Sweden's SAS; Finnair; Tap in Portugal; and some eastern European carriers.

Walsh said some of these airlines were attractive to BA. Whether that includes his former employer, Aer Lingus, is a
moot point but the timing was certainly interesting. It came just days after the Office of Fair Trading launched an investigation into Ryanair's 29.9 per cent holding in its rival and after Ryanair suggested that the Government would sell its 25 per cent stake in Aer Lingus.

Mueller would love to get a big flag carrier like BA to replace the Government on its share register. For his part, Walsh might like to have some influence over Aer Lingus’s 20-plus Heathrow slots and the Irish carrier could feed BA’s long-haul operation. But would Walsh want to rattle O’Leary’s cage? Probably not but it would be good sport if he did.