Aer Lingus is weighing up a strategic alliance with a leading European airline as it endeavours to thwart a hostile takeover from Ryanair.
The board of the Irish flag carrier is consulting with its financial advisor, Goldman Sachs, on various options, which include potential alliance talks with one or all of British Airways, Air France-KLM and Lufthansa.
The talks follow Monday’s announcement that chief executive Dermot Mannion had resigned with immediate effect.
Mannion was forced out following a row over a proposed bonus and shareholder disquiet amid a rapidly deteriorating financial outlook. He said the move would “allow a new CEO to bring fresh thinking and new ideas to the business”.
Last month’s profit warning sparked outrage from Ryanair, which has taken big losses on its 29.8 percent investment in Aer Lingus.
Michael O’Leary, chief executive of Ryanair, said Aer Lingus had “misled shareholders” in its defence document - which claimed the company would “achieve profit overall in 2008” after cutting costs and that the €748m bid undervalued it.
The first Ryanair takeover offer was blocked by the European competition authorities.
Ryanair’s second all-cash hostile bid launched last December at €1.40 a share, half the €2.80 offered in its original bid in October 2006, valued the company at €1.48bn. Since the failure of the second bid the share price has almost halved again.
The Irish government opposed the second bid for competition reasons and said this year it remained in favour of Ireland maintaining two leading carriers.
Colm Barrington, takes over until a successor is appointed. Favourites within the airline include chief executive Niall Walsh and chief finance officer, Sean Coyle, who recently joined from Ryanair.
Barrington said: “On behalf of the board and management team, I would like to thank Dermot for his significant contribution to the group over the past four years. We would like to record our appreciation for his loyalty and dedication to Aer Lingus.”
“Against the backdrop of challenging market conditions, the board and management team are focused on maximising revenues, reducing operating costs while maintaining a strong balance sheet to deliver value for all shareholders.”