AER LINGUS could be without a permanent successor to departing chief executive Dermot Mannion for as long as six months as the loss-making airline engages recruiters to seek external candidates for the post, according to company sources.
Mr Mannion stepped down yesterday, prompting non-executive chairman Colm Barrington to take day-to-day executive responsibility for the business until a replacement is appointed.
Finance director Seán Coyle and corporate planning director Stephen Kavanagh are considered likely to put their names forward, but Mr Barrington’s taking of the reins led informed observers to speculate that an external appointment may be more likely.
Thanking Mr Mannion for his service, Mr Barrington said the airline was focused on maximising revenues, reducing operating costs and maintaining a strong balance sheet.
Mr Mannion’s resignation was followed by a 7.5 per cent gain in Aer Lingus shares, which closed at 72 cent. The stock, down 65 per cent in a year, dropped to 48 cent last month after Aer Lingus warned it would incur an operating loss this year, setting aside a forecast of profits only weeks earlier.
His departure was greeted with stinging derision by Ryanair, the biggest Aer Lingus investor with a stake exceeding 29 per cent. Ryanair chief Michael O’Leary said he had “little faith” that Mr Barrington or the Aer Lingus board would find a suitable replacement.
Mr O’Leary said Mr Mannion should be succeeded by David Begg, president of the Irish Congress of Trade Unions and a non-executive Aer Lingus director. Unions and the Government already control the firm, he said.
“The fact that Aer Lingus has lost its tenth chief executive in 16 years is more than carelessness or stupidity. It is a sign of a dysfunctional board and a failed ownership structure in Aer Lingus,” Mr O’Leary said. “No worthwhile chief executive would wish to work for a company like Aer Lingus where the vested interests of Government and the trade unions repeatedly frustrates or gets rid of effective management and destroys shareholder value.”
A high rate of cash burn and the absence of a new strategy to arrest it was widely held yesterday to be a prime factor behind Mr Mannion’s departure. “My decision to step down will allow a new CEO to bring fresh thinking and new ideas to the business,” he said.
NCB analyst Neil Glynn said Mr Mannion’s position may have become untenable following recent events, adding that his departure adds to the uncertainty over the short to medium-term development of Aer Lingus.
Davy analyst Stephen Furlong said the company’s focus appears to be moving to short-haul, with the potential renegotiation of deliveries of long-haul A330 planes planned for 2010 and 2011.
