Abu Dhabi-based airline surprises with Dublin expansion; Merrion says resizing of fleet could be on cards at Aer Lingus; Travelodge plans opening in Dublin’s Summerhill
Brave hotelier's Dublin venture
WHILE MOST hotel groups dig in and try to survive the recession, Séamus McGowan is planning to add a first property in Dublin city centre to his chain of Travelodge budget hotels here.
Subject to approval from An Bord Pleanála, McGowan is planning to add a 380-bed hotel at Summerhill close to Croke Park in early 2011.
It would be the biggest Travelodge on the island – the chain will open its 11th property on June 1st in Castletroy, Limerick.
“We’re one of the few companies in Ireland that is actually developing and growing,” McGowan said.
His timing is interesting, given the recession and the decline in tourist numbers, especially from the UK.
Travelodge recently offered 100,000 rooms here at just €29 a pop in response to the tough climate.
“We think our business model is fairly robust,” he said. “Going forward we feel a large budget property in the centre of Dublin will do very well. Our other Dublin properties are doing reasonably well.”
Travelodge is controlled here by a company called Smorgs Ireland Ltd, in which McGowan is one of three owners. It holds the Irish master franchise for the hotel chain for 30 years, having acquired the rights in 2004.
Latest accounts show Smorgs made a pre-tax profit of €1.8 million in 2007 and had retained profits of €17.8 million at the end of that year.
McGowan said the Dublin hotel would cost about €35 million to build if it gets the green light from planners. This will be funded through debt, a tricky proposition currently.
“It’s something we’re still finalising,” he said. “We’re confident of putting the resources in place. There’s still business out there to be done.”
Long-haul may bear brunt of Aer Lingus action
AER LINGUS’S decision to bring forward its board meeting by a week to today has set tongues wagging.
High on the agenda is believed to be its rate of cash burn (its cash pile could be reduced to €400 million this year – half the level of last June) and long-haul strategy, which is proving a major drain on the business in the current economic climate.
Some board members are said to have been spooked by the recent negative reaction to its full-year results and outlook.
Interestingly, Merrion Stockbrokers, a former adviser to the airline, put out a note yesterday suggesting that a resizing of the long-haul fleet to conserve could be on the cards.
Aer Lingus is due to add four long-haul aircraft to its fleet in 2010 and 2011. Merrion analyst John Mattimoe argues that the airline could save €225 million by cancelling these deliveries or restructuring the order to avoid a penalty.
Mattimoe says that planned retirements would reduce its long-haul fleet to seven by the end of 2010, assuming that deliveries of new planes are cancelled.
With one aircraft committed to its transatlantic joint venture with United Airlines in 2010 (for the proposed Washington-Madrid route) this would leave Aer Lingus with six aircraft for its transatlantic services.
“We believe that six aircraft is the maximum needed to service expected Ireland-US demand levels,” Mattimoe said.
He estimates that long-haul accounts for about 30 per cent of Aer Lingus’s passenger revenues in 2009, while it accounts for the “lion’s share” of the €60 million operating loss Merrion is projecting for the airline in 2009.
“This underlines the rationale for the current long-haul fleet investment programme,” Merrion said. “Decisive action on capacity adjustment will help reduce losses and improve returns in the long-haul segment.”
Etihad to spread its Irish wings
WHILE MANY airlines operating out of Dublin airport are scaling back, Abu Dhabi-based Etihad continues to add to its schedule and is even planning to hold invitation-only interviews here as it seeks to fill 200 cabin crew positions this year.
Etihad launched its Dublin service on July 2nd, 2007, offering flights to Abu Dhabi and onward connections with the airline to Australia, Johannesburg and various points in Asia. It is now flying from here seven days a week and from Sunday, passengers leaving Dublin will be able to connect onwards to Melbourne.
Country manager Beatrice Cosgrave tells me that Etihad will have carried 200,000 passengers by the end of this month and its load factor is a healthy 81 per cent. It carried about 25,000 passengers in January and February on its Dublin service.
Cosgrave wouldn’t reveal any financial details or talk about average yields, except to say they are “under pressure”.
In a sign of the times, its aircraft configuration has been altered, with more economy seats added to cater for cost-conscious passengers and the business cabin now holding 22 travellers. “The economy cabin has worked well for us,” Cosgrave added.
Fortunately for the airline, it is supported by the deep pockets of the oil-rich Al Nahyan ruling family in Abu Dhabi. Its marketing budget was sufficiently healthy to support signing up last year as a sponsor for the All-Ireland Senior Hurling Championship. That two-year deal runs out in September with the airline having an option to extend it to 2011.
Etihad is expected to be one of the first airlines to use the new Terminal 2 at Dublin airport, which is due to open in the spring of 2010 and is aimed primarily at long-haul carriers. “No final decision has been made on T2 at this time, but it’s important to us that we are able to offer the best possible service to our passengers,” Cosgrave said.
Etihad has added to its Irish connections by hiring Wicklow HR executive Ray Gammell from Royal Bank of Scotland and Ryanair’s Jim Callaghan to senior positions within the airline. It employs 15 staff directly in Ireland.
Etihad will be holding interviews for the cabin crew positions in Dublin on May 6th, with applications being accepted through its website.The prospect of sun, sea, travel and tax-free earnings in the Emirate should ensure a flood of applications.
Little Things
RUMOURS CIRCULATED this week that John Teeling was preparing to do a deal with British oil and gas explorer Amerisur Resources for his AIM-listed Pan Andean oil production company.
Amerisur’s chairman, Giles Clarke, was in Dublin for a series of meetings and met with Teeling and his associates this week.
Clarke is head of the England and Wales Cricket Board and has taken serious flak of late for sponsorship deals he agreed with financier Alan Stanford, who is accused of fraud in the US, in relation to England’s cricket team.
We’re told his meeting with Teeling was to discuss a joint venture in Colombia, where both parties have prospects, rather than any MA activity. According to sources, “nothing concrete” was agreed.
It’s a sign of times when an Irish social magazine decides to launch a business magazine.
RSVP Business made its bow in March – a brave move by publisher Progressive News Media, given that Irish print advertising revenues have fallen off a cliff in the past six months.
To help drive circulation, it’s signed up wealthy entrepreneur Bill Cullen as “executive editor”.
Starting in April, Bill will bring readers a “unique insight into his thoughts on business in Ireland”.
He’ll no doubt lend a bit of clout to the publication, although, given the success of his memoir Its A Long Way From Penny Apples, and his lengthy stint fronting The Apprentice on TV3 last year, we can’t help wondering how “unique” this insight will prove.
A British subsidiary of Daon, the biometrics firm back by financier Dermot Desmond, made a small profit in 2007, according to accounts just filed.
Daon (UK) Ltd made a profit before tax of €41,953 , roughly the same level as in 2006. Its turnover rose slightly to €595,042. Accumulated profits stood at €126,732 at the year end.
Daon’s three employees earned €425,000 between them last year while directors emoluments amounted to just under €400,000, according to the accounts.
Biometrics technology is used by government and transport groups to identify people by scanning physical features such as fingerprints, irises or faces.
The British subsidiary is the only part of Dublin-based Daon to publish accounts. Desmond is reported to have pumped millions into the business.
