Outlook for Aer Lingus is "highly uncertain" as the Company reports increasing Losses

The management of Ireland's national 'flag carrier' Aer Lingus says that "the outlook for the airline is highly uncertain" in light of the latest financial results. Their losses have tripled to now € 93 million in the first half of this year.

After taxes the net loss in the first six months of 2009 more than tripled to now € 73.9 million (compared with a net loss of € 21.6 million for the same period of last year), while revenues were down over 12% on the back of lower passenger fares and cargo fees.

In a company statement Aer Lingus said that it is "not in a position to give guidance for the full year at this time".

The company also announced that it can no longer afford to pay what is described as 'legacy-style' rates to its staff.

Aer Lingus' Chief Financial Officer Sean Coyle stated that the company's board has "a tough job, but believes the airline can be made successful as an independent entity as it undertakes an exhaustive and wide-ranging examination of its operations and commercial focus".

This is nice boardroom lingo, the new language big companies and their representatives use these days to confuse the rest of us, the normal people who speak proper English.

But what does it actually mean?

"Clearly we can't sustain operating losses of these levels, we can't sustain the kind of cash burn we've had in the first half of the year, and we need to rebase our cost structure to live with the lower fares that our passengers are prepared to pay," Sean Coyle explained in a second attempt.

Well, this is a lot clearer, although I still wonder what it means "to rebase our cost structure"...

Perhaps it means just to spend less money, and maybe Aer Lingus should start doing that from the top down. Their directors are still overpaid, and even more so in light of the now revealed disastrous company results.

No bank is prepared to lend money to an airline that is burning about € 400 million of net cash in a 12-month period. Not even the Irish banks that brought us the 'credit crunch', recession and national finance crisis.

"We have to come up with a cost plan to stabilise our position. Nothing is ruled out at this time," Sean Coyle emphasised.

I wonder if he and his fellow directors have thought of reducing the number of their flights and aeroplanes, to match an obviously shrinking market. The idea that anyone can fly to anywhere for next to nothing and for no particular reason is ludicrous. It ruins the rest of the ozon layer that is left by now, and does further damage to our planet.

Education has to do its part to bring the message home, and governments - not only the Irish - have to play their part as well, first of all by imposing normal fuel taxation on aircraft fuel, which is still - and for no good reason - tax-free.

Too many people still fly to too many destinations, for no real reason. Holidays can be spent in one's own country as well as abroad, and if someone really feels the need to go to other countries, we still have very good and reliable ferry services.

The financial crisis of Aer Lingus is only the tip of the proverbial iceberg. It shows that airlines and air travel as most people know them are no longer viable and sustainable. I have seen this a long time ago and not used any airline or commercial flight for more than 20 years.
It is time now for everyone to wake up, see the light and accept reality.

If we allow ourselves - and the airlines - to stay in cloud-cuckoo-land, the crash that will happen in due course will be at least of the same dimension as the recent collapse of the banks.

Good Morning, Ireland! Good Morning, World!

The Emerald Islander

Anglo Irish Bank lost € 4 Billion in six Months

Another day, another scandal. This is now the norm here in the Irish banana republic.

Today's serving of outrage is the news that (the now nationalised) Anglo Irish Bank (right) has lost a total of € 4.1 billion in six months (the fourth quarter of 2008 and the first quarter of 2009).
This is on average a loss of € 683 million each month, or € 22.75 million every single day! And it is also the by far biggest bank loss in the history of the Irish state.

The bank's results also show that deposits from businesses have dropped by almost € 9 billion after nationalisation.

Anglo Irish Bank's new chairman Donal O'Connor says that "lending has been imprudent, and the results are very disappointing".

I put it a bit more bluntly: The bank's behaviour was nothing but criminal. And thus those who were responsible for the blunder should be prosecuted and brought to Justice.

Donal O'Connor also indicates that "the total loan losses are likely to reach € 7.5 billion".

Anglo Irish Bank has now written off the sum of € 308 million in relation to loans to ten 'long-standing clients', who then used these funds to buy shares in the bank.
The ten very wealthy individuals who participated in this scam subsequently became known in public and in the media as the 'Golden Circle'.
A total amount of € 451 million was lent by Anglo Irish Bank to members of the 'Golden Circle' , but as it looks the bank may not get € 308 million of that money back.

Among the losses disclosed today were also € 31 million on loans to former directors of Anglo Irish Bank.

The government now plans to seek the EU's approval to put another € 4 billion of State money - which means in fact Irish taxpayers' money - into Anglo Irish Bank in the coming weeks.

Finance Minister Brian Lenihan (left) has announced that he will recapitalise the rotten bank.
"Winding up Anglo Irish, the third-biggest bank in the country, is not an option," he stated, nailing his colours firmly to the mast of a sunken ship. "The priority is to stabilise the bank," Lenihan emphasised.

Well, I am no banker, but as an old sailor let me say this: One can well stabilise the wreck of a sunken vessel, in order to prevent it from drifting, slipping or from becoming a danger to other shipping. But one can never re-float and sail a ship after it was sailed onto rocks and crashed.

The Emerald Islander

And some good News coming through as well...

In my earlier entry from this afternoon I mentioned that some statisticians regard January 19th as "the most depressive day in the whole year" and indeed plenty of people obliged to make it so. In particular the stock brokers in Dublin and London, who sent the financial markets - but especially bank shares - down into the proverbial cellar.

Despite reassuring words from both governments - in Dublin and London - the world's financial dealers no longer trust us and the value of Irish and UK banks plummeted to another all-time low.
The hurried and quite shambolic nationalisation of Anglo Irish Bank by our government was fuelling the fires of distrust instead of sending the - intended - message of stability and 'business as usual'.
And in Britain the announcement of further billions of taxpayers' money being pumped into the sinking banks did not help them a bit. Quite the opposite. Many international finance houses, especially the cash-rich ones in the Far East on whose willing to lend we now depend more than ever, regard us with great suspicion. Subsequently UK bank shares fell by 68% today, losing over two thirds of the little value they now have in one single day!

The combined forces of government ignorance, regulators' laziness and sleeping on their watch, and bankers' criminal greed have holed both Britain and Ireland in a serious way well below the waterline.
The question by now is no longer when we can stop the ships sinking, but if we can stop them at all.

But even on this "most depressive day in the whole year" there is a little bit of good news as well. Five more directors from the disgraced board of Anglo Irish Bank have today announced their resignation from the board, in order to "make room for a new leadership team".
And not a moment too soon. In my opinion their resignation comes actually quite late, and I have not the slightest bit of empathy for these reckless bankers. They are responsible for the biggest financial and political crisis since the 1930s, and if I had the power, I would send them all to jail and throw away the keys...

An even better piece of news is that Brian Goggin (photo), the Bank of Ireland's highly incompetent chief executive, is stepping down as well.
The bank announced today that Goggin will retire this summer, a year earlier than planned. The bad news is that by retiring - instead of being sacked for the massive failure he presided over - Goggin will get his full pension, a golden parachute and many other perks he does not deserve and has not earned.

A man who presided over the collapse of a major bank that lost 95% of its value in less than two years deserves to be sacked, flogged and made to pay for his disastrous lack of leadership.
But as corrupt as our system is, this is unlikely to happen. Brian Goggin will go home as a multi-millionaire and enjoy a jet set lifestyle for the rest of his days. The bill for his folly will be paid by us - the Irish tax payers. But given the fact that for more than a decade a majority of us has persistently elected the most incompetent politicians to government again and again, we deserve nothing else. (And anyone who will in future vote for Fianna Fáil or the Green Party deserves that things get a lot worse than they are already...)

I suppose we should be content with the good news that five of the main gangsters from Anglo Irish are gone and that the arrogant fool Brian Goggin is following suit soon. All in a day's work, and not so depressing after all...

The Emerald Islander

Can we trust the Banks?

Today has seen a massive collapse of share prices on all European stock markets, after a similar plunge was recorded over night on the stock markets of Japan, Hong Kong and India. Tokyo's Nikkei index closed down 3.86%, reaching its lowest level for more than two years, while Hong Kong's Hang Sang fell by 5.5%. Many investors around the world sold shares in panic, because of serious concerns that the US economy is about to fall into recession. This led to spectacular losses of up to 7% in some markets.

In London the FTSE 100 index tumbled by 324 points (or 5.5%) to 5578, taking £ 84 billion off the value of its listed shares. In Paris the CAC lost 6.8% and closed at 4744, and in Frankfurt the DAX plunged a massive 7% to a final position of 6790. Most stock exchanges, including London, Paris and Frankfurt, recorded their biggest single-day losses since the attacks of September 11th, 2001. In Dublin € 3 billion were wiped off the value of Irish shares as the ISEQ index closed down 273 points (or 4%) at 6261, its lowest level in two and a half years.
Wall Street is closed for the annual Martin Luther King holiday, but analysts expect that tomorrow the US markets will suffer losses as well, especially since the ailing US economy is the main reason for today's sharp reactions.

The world-wide stock market panic is a direct reaction to George W. Bush's announcement of plans to revive the faltering US economy through large injections of extra money. There are new worries that many US consumers, facing difficulties paying their mortgages, are also beginning to default on credit cards. That increases already existing fears about the effect this will have on banks' willingness to lend.

So once again the world's economic stability and our all livelihood depends on the banks. These are the very same banks that have been gambling with our money for decades, creating large profits for themselves, while inventing ever more and higher fees for providing normal financial services to the majority of businesses and individual customers. In their never-ending greed the major financial institutions - including Citi Bank, the world's largest bank - went even further and created financial products that make no sense at all and were bound to fail.
They deliberately sold - through a network of shady agencies - mortgages to people whose income was never large enough to pay them back. The so-called "sub-prime" mortgages were then bundled by the banks and sold on to other banks and investors around the world as a separate financial product.

These dubious financial machinations created a house of cards that has meanwhile collapsed with a massive crash. The world's financial markets are subsequently in turmoil and the signals of recession are visible everywhere. All this has an even worse effect on the US economy, which has been already weakened by George W. Bush's concentration on war rather than economic and social stability. Hundreds of billions of Dollars are pumped into the Military-Industrial Complex, while many ordinary Americans are struggling to survive, often on the breadline or even below it.

For decades the USA have lived on borrowed time and even more borrowed money. Few people are aware of the fact that more than 80% of loans taken out in the USA are financed with money from abroad, often by banks and institutions in countries much poorer than the United States.

Now the financial chicken are coming home to roost, but one should not expect that the banks will bear the brunt of the crisis. They have already written off tens of billions of Dollars, even before today's massive drop of share prices, and some of the top bankers resigned in disgrace. However, there is no need to feel sorry for them, since they are not feeling sorry for us either. And they retired with large pay-offs and even larger pensions, all paid for in the end by people like you and me. And make no mistake: the banks will find ways and means to slip out of the disaster and make us - the ordinary people - pay for all their greedy follies.

This makes me wonder if we can actually trust the banks. We all need them, of course, since in the modern world of the "global village" financial transactions without banks are difficult and in many cases impossible. Thus the banks have established a hold over us, and ever more it leads to shameless exploitation of normal and poor people, for the benefit of the rich and wealthy as well as the banks themselves. While banks are not shy to take great risks with our money, gambling it away daily on the world's stock and commodity markets, they still treat ordinary people with harshness and arrogance. This will continue to be the case, as long as the customers do not stand up against the banks, apply the same standards to them that they apply to us, and make them stop losing our money in senseless US loans and reckless gambling around the globe.

Personally I have reduced my dealings with banks to the absolute unavoidable minimum. I also shop around for the best conditions and most decent service, and all for the better of everyone. Though I will not tell you what to do and how to behave, you are welcome to follow my humble example.

The Emerald Islander