Aer Lingus has agreed the sale of Futura - its charter subsidiary - in a €35 million deal. The State airline will realise about €28 million from the sale of an 80 per cent stake in Futura. The remaining 20 per cent will be retained as a financial investment.
The controlling interest in the Palma based business - which is generating profits of around €5 million - was acquired by a management team lead by Mr Roman Panné and backed by the Spanish equity group Corpfin Capital.
Aer Lingus chief financial officer Mr Brian Dunne said the sale effectively completed the airline's withdrawal from non-core activities. "It frees us to focus entirely on the core business. Our only interest going forward is to make money," he said.
Mr Dunne said the airline had now stripped €270 million in annual costs from the bottom line, about €80 million more than projected at the start of the year. With savings of another €50 million required, he said the airline wanted to concentrate now on its distribution operations. The continuation of the cost-cutting programme was not expected to have any short term impact on staffing levels, he said.
He said privatisation of the airline "is not taking up any management time" in advance of a Government decision to re-start the process. But Mr Dunne pointed out that the completion of the disposal programme meant the airline could renew its capital expenditure plans. With a capital requirement of €250 million - for new planes - the company will seek to raise more than €100 million through third party investment, on top of €150 million in debt.
Having adopted a "low cost" business model after going to the brink of bankruptcy after the September 11th, 2001 attacks, Aer Lingus has already exceeded the €45 million operating profit target set for 2002. With five weeks trading left in the year, this figure is expected to rise significantly.
Aer Lingus is understood to be targeting a profit margin next year of about 8 per cent compared to 5 per cent this year. Ryanair's margin is at the 30 per cent level and EasyJet's at 11.6 per cent.
Taking account of all the disposals and expenditure of €75 million on a voluntary severance programme it is understood that the airline projects its net cash to reach €120 million at year end, up from €66 million at the end of 2001. Its free cash total - all the money available to it - is expected to rise to about €260 million at the end of 2002, from €170 million a year earlier. The free cash includes $20 million (€20.16 million)working capital facility raised this year from Anglo Irish Bank.
The Futura sale removes an off-balance sheet debt of some €750 million from Aer Lingus's books; this is derived from annual operating lease payments on its 14 plane fleet of about €50 million.
