Good welcome in Dublin for Tiger Airways chief; retailers at odds with Payzone; bigger fish to fry for Willie Walsh; Kleerex clears the way to concentrate on shop fittings
Tiger earns its stripes
THERE WAS a big turnout on Wednesday at the Four Seasons Hotel in Ballsbridge for Tony Davis, chief executive of Singapore-based Tiger Airways.
He was addressing the European chapter of the Wings Club, a New York-based group that holds a lunch here every year. Tiger has a strong Irish connection, with Tony Ryan and his son Declan among its early investors.
“The DNA from the Ryanair model has been firmly established in our model over the past seven years,” Davis told me after the event.
He claims that Declan Ryan’s son Jack came up with the Tiger name by chance at a time when executives were struggling to agree a brand for the new airline.
The Ryan influence has been diluted in recent times, with Ryanasia cashing in most of its chips post Tiger’s IPO last year. Investors got a return of 30 times their money at the IPO.
Declan Ryan’s stake is now down to about 2 per cent and he has stepped down from the board.
But Declan has invested in Thai Tiger Airways, a Bangkok-based joint venture between Thai Airways and Tiger. Ryan has taken a 10 per cent stake in the new airline, with the investors putting up $6 million between them.
“We’re delighted to have Declan on board,” Davis said.
Tiger has 25 aircraft (all new), flies to 37 destinations and its route map stretches from southern China to India and Tasmania.
Its average fare is €65, about 50 per cent higher than Ryanair.
“But our average flight time is about two hours.”
Davis said Asia is the “place to be” for airlines right now. “It’s booming.”
Tiger has netted profits of $47 million in the first nine months of its financial year.
He is sanguine about rising fuel prices.
“We’re better positioned to manage our costs than rivals at legacy carriers.”
Retailers still waiting for dream ticket
A ROW is brewing between retailers and Payzone, the electronic payments group, over the launch of integrated ticketing for bus and rail in Dublin.
Some retailers have claimed that Payzone wants them to move their entire payment platforms over to that company if their shops are to sell the new smart card for bus and rail travel.
This would cut out rivals Postpoint and Paypoint, who battle hard with Payzone for a slice of the €1 billion market for top-ups and bill payments.
There are about 430 Dublin Bus ticket agents in the capital. Payzone won the contract to manage the payments systems for the new smart card.
Some retailers also say they have been informed verbally that the commissions on these smart cards will be half that paid for Dublin Bus tickets.
They currently get a 4 per cent commission for selling Dublin Bus tickets but have been told that this is to be reduced to 2 per cent.
Vincent Jennings, chief executive of the Convenience Stores Newsagents Association, confirmed that he has received complaints about this from a number of its members.
“There are significant rumblings from retailers about this,” he said.
“They can’t afford that cut in margins in the current climate.”
One retailer I spoke to, who asked not to be named, has switched to Payzone but is now questioning the decision.
“We were led to believe that we wouldn’t get the bus tickets if we didn’t switch over,” the retailer said. “I’m now thinking of getting the others back in.”
Earlier this week, Payzone said that there was “no requirement” for retailers to switch their other services to Payzone to participate in the scheme.
But Payzone said there were “additional commercial benefits” for those that did so.
This is the latest twist in the onging saga of integrated ticketing, which is set to cost taxpayers €55 million and is running about a decade late.
Hopefully, Payzone and the retailers can sort out their differences and finally get the smart cards moving by the end of this year as promised.
Aer Lingus not a blip on radar of Willie Walsh
AER LINGUS doesn’t appear to be on Willie Walsh’s radar as a potential acquisition target for International Airlines Group (IAG), the holding company for British Airways and Iberia which merged last year.
“Aer Lingus is a good partner providing good Heathrow feed, but at the moment I don’t see them as a potential [acquisition] candidate although things could change,” Walsh told trade publication Airline Business in an interview for its March edition.
This might disappoint Aer Lingus boss Christoph Mueller, who would no doubt love to get Ryanair and the Government off the shareholder register and secure the airline’s future with one of the big legacy carriers.
Recent reports had linked IAG with Aer Lingus and a handful of other second-tier European airlines.
Walsh, who has stepped down from running BA to lead IAG, told the magazine that the Government’s 25 per cent stake in Aer Lingus is a “potential drag on the business”.
Hear, hear to that sentiment.
And his opinion on the future shape of the industry?
“My view is that in Europe, you’ll have three large airline group – IAG, Air France-KLM and Lufthansa – but you’ll also have Ryanair, easyJet and Air Berlin and they will probably continue to consolidate.”
Take out the Air Berlin reference and it could have been Michael O’Leary talking.
UK sale good for Kleerex backers
SOME GOOD news this week for the backers of Dublin-based Kleerex, which makes shop fittings and displays.
Kleerex sold its UK business to Norwegian private equity group Herkules on Wednesday. The sale price wasn’t disclosed, but the investors are believed to have pocketed a tidy sum. NCB Corporate Finance advised the Irish company on the deal.
Kleerex was the subject of a management buyout in 2000. Managing director Michael Ryan and his management team own about 70 per cent of the business, which is also backed by ESB chairman Lochlann Quinn and businessmen John Maybury and David Doyle.
Kleerex had sales of £54 million in the UK in 2010 and employed 183 staff.
Herkules already owns rival group New Store Europe. The combined entity will be one of the biggest store fixtures and interiors companies in Europe, with sales of about €200 million.
With the UK now gone, Kleerex, based in Baldoyle, is left with a small Irish operation that employs about 20 staff.
Latest accounts for Kleerex Group (Ireland) Ltd, which also included the UK business, showed it made a loss of €852,062 in 2009 compared with a profit of €705,083 in 2008. It has been hit by the downturn in the retail sector here.
So does the Irish unit have a future as a standalone entity? “I think it does,” Ryan told me. “But we’re having a look at that now.”
Little things
Some food for thought in the week that Greencore finally threw in the towel on a takeover of Northern Foods.
According to Bloomberg data, if you’d invested €100,000 in Kerry Group shares in April 1991 (around the time Greencore went public), they would now be worth a tasty €1.32 million, with dividends reinvested. Using the same criteria for Greencore and you get a rather more modest figure of €155,000.
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On Wednesday, I bumped into Conor McCarthy, founder of fledgling aircraft maintenance group Dublin Aerospace, at the Wings Club lunch in Ballsbridge.
The company has expanded its operation at Dublin airport over the winter months by moving into hangar four and it now employs 225 staff. It’s also planning a €5 million investment in a new landing gear unit, which has secured a contract with low-cost carrier easyJet. “We’re flying,” McCarthy (right) told me.
“It’s happened quicker than we thought it would. But it’s going well and we’re hoping to land some more work soon.”
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With its €3.6 billion in deposits having been moved to Irish Life & Permanent, Irish Nationwide’s 237 staff gathered in Citywest recently for news on their jobs. It turned out to be the first meeting of staff from Irish Nationwide’s 50-branch network in 38 years. That in itself tells you a lot about the way Michael Fingleton ran the banjaxed building society.
IL&P announced details of a voluntary redundancy programme. Seems there was much laughter when Permanent TSB boss Dave Guinane mentioned the term “increments” in relation to pay.
Increments were a foreign language for many Irish Nationwide staff during the Fingleton regime.
When it came to pay, Fingers had the biggest laugh, pocketing €2.4 million in 2008, his last full year with the institution.
