Public Enterprise Minister, Mary O'Rourke, will apparently announce today who has won the bidding to advise the Government on the flotation of Aer Lingus later this year. Whoever they are, Current Account wishes them luck. They are going to need it to persuade any investors - institutional or private - to put money into any airline stock other than Ryanair.
Hibernian Investment Managers' Bernard Swords was probably being a bit cheeky last week when he said that Aer Lingus is worth only £300 million (€380 million), a long way off the £500 million-plus that the Government wants the airline valued at. After all, the lower the price the better it suits Bernard Swords and his colleagues in the other investment houses.
But whether it's £300 million or £500 million, it's difficult to see anybody rushing to buy Aer Lingus shares, unless they are pitched at a rock bottom price. Remember, at those sort of levels Aer Lingus is the classic mid-capitalisation stock that has been spurned by domestic and overseas investors alike over the past year.
So why should they feel any different about a small Irish airline that had to be rescued from virtual extinction by £175 million of government handouts, is still overmanned and has stroppy groups like overpaid pilots who have no compunction about issuing threats of bringing their airline to a standstill when they have a row overpay.
Given the way that full-service airlines like British Airways are suffering, it's difficult to see what particular attraction Aer Lingus has if it comes to the market. Maybe if investors get some sort of travel discount Aer Lingus might be attractive to punters, but otherwise only a rock-bottom price will get an Aer Lingus IPO off the ground.
By now, if you haven't invested in Ryanair, you've missed the boat and the shares are, if not expensive, then fully-valued. It might not be very patriotic, but if somebody wants to invest in an airline, why not wait until Stelios Haji-Ioannou brings EasyJet to market later this year.
EasyJet mightn't have produced the same sort of explosive growth as Ryanair in the past couple of years, but it is a similar low-cost operation to Ryanair and is in the only part of the airline business that has had any success.
