Ryanair Response To Aer Lingu
RYANAIR RESPONDS TO AER LINGUS' REJECTION OF ITS AGM PROPOSALS TO REDUCE THE BLOATED FEES PAID TO AER LINGUS' NON EXECUTIVE CHAIRMAN AND DIRECTORS
Ryanair today (29th May 09) expressed its disappointment that the Board of Aer Lingus has recommended rejection of its two AGM proposals to cut Aer Lingus' bloated Non-Exec Chairman and Directors fees. Ryanair believes that these two resolutions are clearly in the best interests of all Aer Lingus shareholders. This latest rejection of Ryanair's proposals by the Board of Aer Lingus proves again that it is controlled by the Government and trade unions, leaving Ryanair - its largest shareholder - with no influence whatsoever. Ryanair pointed out that its resolutions, if passed, will reduce the fees paid to the Aer Lingus Board from €730,000 in 2008, to a still substantial €141,000 in 2009, thereby reducing Aer Lingus' costs by almost €600,000 to the benefit of Aer Lingus' profits, its share price and shareholder value.
Ryanair said that this was the fifth time over the past 2 years that Aer Lingus has ignored or rejected proposals from Ryanair, its largest (29.8%) shareholder, which included:
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Ryanair's Aug'07 call for an EGM on the closure of the profitable Shannon base.
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Ryanair's Mar'08 call for Aer Lingus to lower fares to stimulate traffic growth and profits.
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Ryanair's May'08 call for Aer Lingus to scrap its unfair long-haul fuel surcharges which were damaging Aer Lingus' long-haul traffic.
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Ryanair's Feb'09 request that secret multi-million euro senior executive resignation bonuses at Aer Lingus should not be agreed in future without shareholder approval.
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Ryanair's June'09 ordinary resolutions to reduce Aer Lingus' bloated Non Exec Director (and Chairman's) fees which have increased five fold over the past 2 years from €141,000 in 2006 to €730,000 in 2008.
The irrational and illogical determination of the Aer Lingus Board to dismissively reject every proposal from its largest shareholder (as illustrated above) even when these sensible proposals would boost Aer Lingus profits and share price confirms again that Ryanair has no influence whatsoever or control over the Board of Aer Lingus whose only policy appears to consist of taking the opposite course to that recommended by Ryanair regardless of the damage done to Aer Lingus' shareholder value.
Since the Aer Lingus Board continues to be controlled and run by the Irish Government and the trade unions (who between them have appointed the entire Aer Lingus Board) who have presided over an 80% collapse in its share price over the past two years (from over €3 in 2007 to under €0.60 in May 2009) Ryanair has accepted this reality and today announced that it has given a proxy over its 29.8% share of votes at the AGM in favour of the Minister for Transport, Mr Noel Dempsey on the two resolutions covering Non-Exec fees.
The effect of this action is to allow the Minister for Transport - on his own - to decide whether:
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Fees of €140,000 p.a. to a Non Executive Chairman who attends approx 9 Board meetings a year (a cost of over €15,000 per Board meeting) is reasonable or justified,
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Fees of €36,000 p.a. to a Non Exec Director such as (fat cat trade union boss) David Begg (at a cost of €4,000 per Board meeting) is reasonable or justified in the context of a company whose market cap has fallen to just over €300m, and which reported losses of €108m in 2008 and has warned of increased losses in 2009.
Ryanair said it does not expect these individuals to work for free. It simply believes that a majority of non Government and non trade union shareholders would share its view that Non Executive Chairman's fees of €35,000 p.a. and Non Executive Directors fees of €17,500 p.a. (which is what was paid to Aer Lingus Directors in 2006, and is what is currently paid to Directors of other Irish Government Semi-States like the DAA Plc) is fair and reasonable for the limited time involved and the shareholder value destruction delivered by this Board at Aer Lingus.
Speaking today, Ryanair's Michael O'Leary said:
'We have decided on this course of action today in order to avoid conflict at Aer Lingus' AGM on 5th June next. Giving a proxy over Ryanair's votes in favour of the Minister for Transport on the two resolutions concerning the bloated fees paid to Aer Lingus' Chairman and Non Executive Directors simply recognises the reality that Aer Lingus is controlled and run by the Government and the trade unions, which is why shareholder value is being destroyed. These recent events sadly confirm that Ryanair has no control or influence whatsoever over this failing, loss making airline.
'The fact that the Board of Aer Lingus has refused to reduce its Directors' fees to the level they were at just over two years ago in 2006, in recognition of the urgent need to reduce costs in the face of rising losses, or to bring them into line with Directors' fees paid by other comparable semi-state companies (such as the Dublin Airport Authority plc) leaves the Board of Aer Lingus with little or no credibility when it comes to negotiating further cost reductions with its work force and trade unions in order to restore Aer Lingus to profitability.
'Sadly the Board of Aer Lingus seem more concerned to defeat every reasonable Ryanair proposal to improve profitability and shareholder value, in order to repeatedly prove that Ryanair has no influence or control over Aer Lingus. The rejection of these latest proposals is yet another sign of lamentable leadership at Aer Lingus and demonstrates once again that its Chairman and Board are completely out of touch with reality and have no regard whatsoever for the reasonable concerns of its shareholders or shareholder value.
'With Ryanair's votes in his pocket, the Minister for Transport can now alone decide whether fees of over €15,000 per Board meeting are reasonable in the case of Aer Lingus' Non Exec Chairman or fees of €4,000 per Board meeting are reasonable in the case of Aer Lingus' Non Executive Directors, all of whom are either Government appointees or trade union appointees like ICTU boss David Begg.
'If the Minister for Transport, Noel Dempsey, abstains or votes to protect these bloated Directors fees, then he too will have zero credibility when it comes to negotiations with Aer Lingus' trade unions and its workers on the significant cost reductions and productivity improvements necessary to return Aer Lingus to profitability and restore shareholder value.
'Ryanair will be represented at Aer Lingus' AGM next Friday and will be addressing a series of questions to Aer Lingus Chairman, Colm Barrington and Board. We welcome Aer Lingus' recent (22 May) confirmation that Ryanair is welcome to attend the AGM and that we can ask anything we like. We look forward to taking Aer Lingus up on this invitation'.
Ends. Friday 29th May 2009
For further information
please contact:
Stephen McNamara Pauline McAlester
Ryanair Ltd Murray Consultants
Tel: +353-1-8121212 Tel. +353-1-4980300
This information is provided by RNS
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