# Bailing out airlines and other businesses



## Brendan Burgess (6 Apr 2020)

Although I am a shareholder in Ryanair, I don't agree with bailing out airlines. 









						Richard Branson Wants a Virgin Atlantic Bailout. Really?
					

Virgin Atlantic employs 8,500 people, so some help is warranted. But why provide state loans or guarantees when its wealthy owners could do more?




					www.bloomberg.com
				




Brendan


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## Brendan Burgess (6 Apr 2020)

The government is considering changing the rules when flights are cancelled so that airlines can issue vouchers instead of refunds. 









						Coronavirus response: Air passengers could lose refund right under Government plans
					

Shane Ross seeks measures to help alleviate pressure on airlines and travel companies




					www.irishtimes.com
				



_
Long standing rules governing the rights of air passengers look set to be shelved at least temporarily as  Minister for Transport Shane Ross considers giving the green light to plans which would allow airlines issue vouchers instead of refunds if flights are cancelled.

The Department of Transport is assessing proposals to help travel agents and tour operators during “these exceptional times”,  a spokesman said.

Mr Ross has asked for a set of measures which he hopes will alleviate the financial pressures on companies, to protect jobs and businesses. Among those measures is the use of vouchers or credit notes for customer refunds_


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## llgon (6 Apr 2020)

Brendan Burgess said:


> The government is considering changing the rules when flights are cancelled so that airlines can issue vouchers instead of refunds.
> 
> 
> 
> ...




The laws regarding this are set in Europe so I don't think Shane Ross or the government will be able to anything about it on their own.

The airlines have previously appealed to the European Commission for a change and were turned down.  They will probably try again.









						Airlines Disappointed with European Commission Guidelines on EU261
					

IATA and Airlines for Europe (A4E), reacted with dismay to the European Commission’s new guidelines on the application of the EU261 passenger rights regime




					www.iata.org


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## Fidgety (6 Apr 2020)

In the US, where airlines have attempted to issue vouchers instead of refunds to preserve cash, the US government has issued a directive instructing US airlines to refund customers. This approach will most likely result in the airlines needing more cash from the bailout programme.


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## joer (6 Apr 2020)

I do not think people will be happy about this proposal. I know I will not be anyway.Why not give the refunds as when this is over many people will be booking flights so they , the airlines, are not going to lose out .


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## joer (8 Apr 2020)

Ryanair have now already gone with the ,no refund,policy.  You can now just change your flight without any charge for changing. You can only book a flight within 3 months but you pay the difference of the price and you can only book a flight to the destination where you were booked to go. But no refund. What do people think of that ?


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## RedOnion (8 Apr 2020)

joer said:


> But no refund. What do people think of that ?


Is this for a flight that has actually been cancelled?


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## joer (8 Apr 2020)

We were due to fly in May and this is an email i received this morning about my flight . They did not actually say it is cancelled but it can be changed...


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## RedOnion (8 Apr 2020)

joer said:


> They did not actually say it is cancelled


It's not cancelled. Yet.
If it gets cancelled, they'll refund. That's how they've been operating to date. I haven't seen any change in their policy.


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## Bigbangr1 (8 Apr 2020)

Etihad has cancelled our flights for April 18 from Dublin too the Philippines.the only choices they are giving is a travel credit or a once off free re booking.we are looking at the travel credit at this time but would rather a full refund due too them cancelling it.


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## joer (8 Apr 2020)

Their actual words are , we are offering you the following options in relation to your booked flight. They are as described above.


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## Ceist Beag (9 Apr 2020)

Flight refunds are already discussed in the Flight Refunds  thread. The advice is to do nothing until the airline cancels the flight and then you will get your refund.


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## Purple (9 Apr 2020)

Back on topic; The State should only give money to publicly quoted companies in exchange for shares in those companies.
Money given to private companies should be in the form of loans, even if they are as a zero interest rate.


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## Leper (9 Apr 2020)

Ryanair has enough zealots of its own to try and screw honest people out of hard earned money already and championed by their money grabbing boss. I don't believe in giving them a cent of public money. If Ryanair lived by the sword, it should die by the sword.


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## Purple (9 Apr 2020)

Leper said:


> Ryanair has enough zealots of its own to try and screw honest people out of hard earned money already and championed by their money grabbing boss. I don't believe in giving them a cent of public money. If Ryanair lived by the sword, it should die by the sword.


What makes them any different from any other airline, other than their success and strong financial position?


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## RedOnion (9 Apr 2020)

Leper said:


> If Ryanair lived by the sword, it should die by the sword.


I don't believe Ryanair have asked for any financial assistance? They're sitting on enough cash to ground their entire fleet for a long period. Ryanair are actually on the other side of this one, and want to make sure that any state aid to other airlines doesn't distort competition.
The calls for state aid are mainly from the typically larger carriers, particularly those that fly long haul and have massive debts. Have a look at who's providing refunds Vs vouchers for cancelled flights.


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## Leper (9 Apr 2020)

Purple said:


> What makes them any different from any other airline, other than their success and strong financial position?



It has been proved that they flout the laws of some countries e.g. charging for"duty free" shopping brought on board the aircraft.


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## Purple (9 Apr 2020)

I'd be more concerned by airlines that take safety shortcuts


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## Sunny (9 Apr 2020)

One thing that needs to stop are the huge share buyback programmes by European and American airlines when they are enjoying a successful cycle. Aviation is an extremely cyclical business and we seem to be a position where Airlines are giving cash to shareholders in good times and then a crisis hits, they are suddenly cash strapped. If industries like banking need cyclical buffers, then aviation industry does too. Especially for systemically important airlines.


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## Purple (9 Apr 2020)

Very good point Sunny


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## Brendan Burgess (9 Apr 2020)

Leper said:


> Ryanair has enough zealots of its own to try and screw honest people out of hard earned money already and championed by their money grabbing boss. I don't believe in giving them a cent of public money. If Ryanair lived by the sword, it should die by the sword.



Which is why they are profitable and why they have €3 billion of cash and have said that airlines should not be bailed out.

It's more a case of those who live by the sword, do not need to the taxpayer to swing the sword for them. 

Brendan


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## Sunny (9 Apr 2020)

Brendan Burgess said:


> Which is why they are profitable and why they have €3 billion of cash and have said that airlines should not be bailed out.
> 
> It's more a case of those who live by the sword, do not need to the taxpayer to swing the sword for them.
> 
> Brendan



Except they have 3 billion in cash are yet still expect the State to pay their employees for the next couple of months


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## Purple (9 Apr 2020)

Sunny said:


> Except they have 3 billion in cash are yet still expect the State to pay their employees for the next couple of months


Any company with no work for their employees to do is entitled to lay them off. It doesn't matter how much money they have.


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## Sunny (9 Apr 2020)

Purple said:


> Any company with no work for their employees to do is entitled to lay them off. It doesn't matter how much money they have.



They are not letting them go. They are taking the Government Wage Subsidy Scheme which is State Aid for the s local business and a multi-billion euro airline with 3 billion in cash. So how exactly are we defining Ryanair not needing State support like other airlines then? Despite their 3 billion cash pile, they are not shy in ta king any State support that will be available. They have taken State subsidies to set up routes across Europe. When they were founded, they were given protected routes that Aer Lingus couldn't compete on. If it comes to it, Ryanair will be in the queue for State Aid just like every other Airline. Michael O'Leary going on about Airlines should fail (and a lot of them should) is fine but he won't be long changing his tune when he needs to.


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## Leo (9 Apr 2020)

Sunny said:


> Despite their 3 billion cash pile, they are not shy in ta king any State support that will be available.



To play devil's advocate, they do have a legal duty to serve the interests of their shareholders. Which is best for them? Availing of state aid or being an outlier and refusing it?


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## Purple (9 Apr 2020)

Sunny said:


> They are not letting them go. They are taking the Government Wage Subsidy Scheme which is State Aid for the s local business and a multi-billion euro airline with 3 billion in cash. So how exactly are we defining Ryanair not needing State support like other airlines then? Despite their 3 billion cash pile, they are not shy in ta king any State support that will be available. They have taken State subsidies to set up routes across Europe. When they were founded, they were given protected routes that Aer Lingus couldn't compete on. If it comes to it, Ryanair will be in the queue for State Aid just like every other Airline. Michael O'Leary going on about Airlines should fail (and a lot of them should) is fine but he won't be long changing his tune when he needs to.


Welfare support for employees who have been laid off, or would otherwise be laid off, is different from bailing out airlines which need money to repay debts etc.


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## seamus m (9 Apr 2020)

Why bail out someone who doesn't need it.If it was your own money you would need a return shares for money etc.Let them pay it back not our grandchildren .There is also so much wrong with furloughing of staff  that it's not even funny ,succesfull companies can take a hit on past success and not what they are missing out on.


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## Purple (9 Apr 2020)

seamus m said:


> Why bail out someone who doesn't need it.If it was your own money you would need a return shares for money etc.Let them pay it back not our grandchildren .There is also so much wrong with furloughing of staff  that it's not even funny ,succesfull companies can take a hit on past success and not what they are missing out on.


I totally disagree with the State providing capital to publicly quoted businesses. 

I don't have a problem with the State providing welfare to people who have lost their job or supporting any business which continues to pay the wages (or part of the wages) of employees which otherwise would be made redundant.

If we are talking about the debts we have foisted on our grandchildren then I'd start with pensions, the bailout of bondholders during the last financial crisis and the generally out of control spending on public services which requires us to continue to borrow money each year.


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## Brendan Burgess (9 Apr 2020)

Lufthansa is looking for a bailout









						Lufthansa losing €1m an hour, will need state aid - CEO
					

Lufthansa is losing €1m an hour as the coronavirus pandemic paralyses travel, CEO Carsten Spohr said, warning that the German airline giant would need state aid to survive.




					www.rte.ie


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## Brendan Burgess (9 Apr 2020)

Purple said:


> the bailout of bondholders during the last financial crisis



Hi Purple 

The big cost was the bailing out of the depositors.  Mainly in Anglo and Irish Nationwide. The cost of the bondholders was much less. 

Brendan


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## Sunny (9 Apr 2020)

Leo said:


> To play devil's advocate, they do have a legal duty to serve the interests of their shareholders. Which is best for them? Availing of state aid or being an outlier and refusing it?



Absolutely but dont get on high horse lecturing other airlines and Countries about state aid like o'Leary does. 



Purple said:


> Welfare support for employees who have been laid off, or would otherwise be laid off, is different from bailing out airlines which need money to repay debts etc.



Why? Its State Aid to keep employees and stay in business. Yes it benefits employees but are we really saying that a company with 3 billion in cash cant afford to pay their employees for the 12 weeks of this scheme? Of course they can but they also want to keep cash and pay as little as possible while being ready to take advantage once lock downs are lifted. Are the State or employees who are down huge amounts going to get refunded when things get better? Of course not. So it is State Aid. Might not be necessary to keep them in business but it is helping them keep as much of their precious 3 billion of cash as they can.


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## Leo (9 Apr 2020)

Sunny said:


> Absolutely but dont get on high horse lecturing other airlines and Countries about state aid like o'Leary does.



I think most would agree that these are very different circumstances. Where has he complained about state aid to an airline who have been forced by the state to cease operations?


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## Brendan Burgess (9 Apr 2020)

No, Sunny is dead right.

The tax payer should pour money only into badly managed airlines and businesses which have paid out dividends to shareholders during the good time and who have  made no plans for a recession or business interruption.

It's crazy contributing to the salaries of well run companies, who don't pay dividends, and who keep their costs and risks low,  and who build up reserves so that they can survive in the inevitable difficult times. Such companies should be told to make all their staff redundant. That would be much better all round.

We certainly don't want to be encouraging companies to manage their business affairs well. 

Brendan
Ryanair shareholder


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## Sunny (9 Apr 2020)

Brendan Burgess said:


> No, Sunny is dead right.
> 
> The tax payer should pour money only into badly managed airlines and businesses which have paid out dividends to shareholders during the good time and who have  made no plans for a recession or business interruption.
> 
> ...



I dont really get your point Brendan. You are a shareholder in Ryanair so why should I protect your shareholding? I thought you believed in the free market. Ryanair cut their employee wages in half or more before any state support was announced. Just like are lingus. Both companies have vast cash piles to meet those commitments. The state then announce the wage subsidy scheme so suddenly these companies with billions of cash dont even have to pay the 50%. No the taxpayer will do that. And then once this crisis is over ryanair will soon start back using their cash pile to pay dividends and stock buybacks to investors like you while the employees and taxpayers lose out. If they have money, use it. If they dont have it, go under and yea people lose jobs. Not like it will be the first time. Small businesses need help and protection. Publically quoted companies like Ryanair and IAG dont. Not until they use all their existing resources. Then let them come looking for help.


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## Baby boomer (9 Apr 2020)

Leo said:


> Where has he complained about state aid to an airline who have been forced by the state to cease operations?


Flybe.  About 2 months ago.


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## Leo (10 Apr 2020)

Baby boomer said:


> Flybe.  About 2 months ago.



The British government forced Flybe to cease all operations in February? You have a link to that?


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## Baby boomer (10 Apr 2020)

Leo said:


> The British government forced Flybe to cease all operations in February? You have a link to that?


Mea Culpa!  I misread your post and didn't focus in on the "forced by the state" bit.  My apologies.
However, the point remains that O'Leary was extremely critical of the UK government's support for Flybe.  A bit hypocritical considering the bucketloads of state aid soaked up by Ryanair over the years.


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## Leo (14 Apr 2020)

Baby boomer said:


> However, the point remains that O'Leary was extremely critical of the UK government's support for Flybe.



I think being critical of government support for an airline that can't stay afloat in the good times while the well run ones are taking massive volumes of cash out of their businesses is fair enough though. When the government forces them to cease operations, support then is a different matter entirely.


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## Baby boomer (14 Apr 2020)

Leo said:


> I think being critical of government support for an airline that can't stay afloat in the good times while the well run ones are taking massive volumes of cash out of their businesses is fair enough though. When the government forces them to cease operations, support then is a different matter entirely.


Maybe.  However, fact is that Ryanair was "bailed out" by the Irish Government in its early years by virtue of its main rival, Aer Lingus, being ordered by the minister to cease operating to Stansted and some other destinations, thus handing a state-enforced monopoly to Ryanair.  This contributed to the financial troubles of Aer Lingus, which then required a cash bailout form the Irish taxpayer.  So in a very real sense, the Irish State bailed out Ryanair free gratis and enriched the company and its owners at the taxpayer's expense.
When Government intervenes in a market like that it should, at the very least, take an equity stake.


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## Sunny (14 Apr 2020)

Leo said:


> I think being critical of government support for an airline that can't stay afloat in the good times while the well run ones are taking massive volumes of cash out of their businesses is fair enough though. When the government forces them to cease operations, support then is a different matter entirely.



Nobody has forced them to cease operations. Airlines are free to fly all they like. Aer Lingus are continuing to operate multiple transatlantic flights each day as well as flights to Europe and London. Same with Ryanair. Whether people choose to travel with them is another story. There are currently flights taking off with as little as one or even no passengers on board.

They are not comparable to the thousands of small businesses forced to close.


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## Leo (14 Apr 2020)

Sunny said:


> Whether people choose to travel with them is another story.



Non-essential travel is banned!


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## llgon (14 Apr 2020)

Baby boomer said:


> Maybe.  However, fact is that Ryanair was "bailed out" by the Irish Government in its early years by virtue of its main rival, Aer Lingus, being ordered by the minister to cease operating to Stansted and some other destinations, thus handing a state-enforced monopoly to Ryanair.  This contributed to the financial troubles of Aer Lingus, which then required a cash bailout form the Irish taxpayer.  So in a very real sense, the Irish State bailed out Ryanair free gratis and enriched the company and its owners at the taxpayer's expense.
> When Government intervenes in a market like that it should, at the very least, take an equity stake.



In Ryanair's early days they were competing against Aer Lingus who were receiving huge subsidies from the taxpayer at the time. There is a good argument that they were using them to try and put Ryanair out of business. The government made a couple of minor interventions to try to balance this. 

It's a bit of a long shot to blame Aer Lingus's later financial problems on this, other than the fact that the breaking of Aer Lingus's monopoly meant that they had to reduce their grossly overpriced fares.


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## Brendan Burgess (14 Apr 2020)

Baby boomer said:


> Aer Lingus, being ordered by the minister to cease operating to Stansted and some other destinations, thus handing a state-enforced monopoly to Ryanair



That was a terrible thing to do.

Look at the damage that Ryanair has done to the Irish  and European economy since then!

It has made low fairs commonplace so that people can take €19 flights to other European capitals.  And we have been flooded with tourists in Ireland thanks to their low fairs.

The government should have made sure that Aer Lingus crushed them. Aer Lingus would now have much higher fares and those of us who want to go on holidays could take the boat train as we used to do in the 70s.

We should go back to the way we were where flying was limited to business people and the very wealthy.

Brendan
Ryanair shareholder


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## Fidgety (14 Apr 2020)

Just to add to the difficulties facing the airline business, Boeing just announced the cancellation of 150 Max airplane orders.


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## Baby boomer (14 Apr 2020)

Brendan Burgess said:


> That was a terrible thing to do.
> 
> Look at the damage that Ryanair has done to the Irish  and European economy since then!
> 
> ...


You misrepresent my argument!  

So we had a state monopoly up to 1990 or thereabouts.  The answer is to open up the market to competition on a level playing field basis - no preferential treatment for anybody.  The answer is not to create ANOTHER state-enforced monopoly to compete with the first one.  If the state confers a monopoly on a private company it should extract a licence fee or an equity stake.  Ryanair wouldn't be the multi-million organization it is today without that initial state intervention to distort the market in its favour.  
It's not like Ryanair did us a favour from the goodness of their hearts!  If they hadn't come along another low-cost operator would have done so.  easyJet, probably!  We'd have had the same low prices, but far nicer customer service and a more pleasant flying experience.


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## Brendan Burgess (15 Apr 2020)

Baby boomer said:


> far nicer customer service and a more pleasant flying experience.



Ah, I was wondering what your problem was. 

The real problem is that you just don't like Ryanair. You don't like airlines which fly on time. You don't like cheap flights.   You prefer to pay higher prices and get a cup of tea. 

The reality is that Ryanair,  motivated by profit, shook up the state monopoly of Aer Lingus and these days, I can fly for a day to London or many other European cities and not worry too much about the price. 

Brendan 
Ryanair shareholder


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## Baby boomer (15 Apr 2020)

Brendan Burgess said:


> Ah, I was wondering what your problem was.
> 
> The real problem is that you just don't like Ryanair. You don't like airlines which fly on time. You don't like cheap flights.   You prefer to pay higher prices and get a cup of tea.
> 
> ...


Trust me Brendan, I like cheap prices!  I really do.  But I don't think that requires shoddy service and a sneering attitude to customers.  What I really like is value for money.  (I don't particularly like airline food, free or paid for, that's not an issue.  Anyway, Aer Lingus don't do free tea these days!) I am prepared to pay a small premium for Aer Lingus over Ryanair.  Just for the feeling of being treated like a wanted customer.  And sometimes, Aer Lingus are actually cheaper.  Kinda like shopping in Superquinn for the nice stuff back in the day.  But I'd still go to Tesco or Lidl for the bulk shopping.  Just like I'll fly Ryanair if the cost or flight times make it a value proposition.  But it's never going to be my favourite airline and I'll avoid it if there's any decent option to do so.  Does that make sense?


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## Leo (15 Apr 2020)

Baby boomer said:


> am prepared to pay a small premium for Aer Lingus over Ryanair. Just for the feeling of being treated like a wanted customer.



Have you ever had to try resolve a complaint with AL? They go further than most airlines to make you feel like you don't even exist!


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## Purple (15 Apr 2020)

Leo said:


> Have you ever had to try resolve a complaint with AL? They go further than most airlines to make you feel like you don't even exist!


I used to travel a lot, about 100 flights a year. The worst experience, by far, was Aer Lingus Regional. €380 for a return flight to Aberdeen on a  noisy turbo-prop and no proper cabin service. After that Ryanair and Aer Lingus were much the same; older Ryanair planes were the worst and the newest Ryanair planes were the best. Customer service from both was rubbish. No frequent flier points with Ryanair and none with Aer Lingus Regional. Nothing makes you feel like a second class customer more than spending more than €12,000 a year with an airline, taking about 60 flights, and not even getting access to their lounge.
So no, Aer Lingus are not better than Ryanair. Aer Lingus are Ryanair in Green with older planes, slower turnaround times and notions about themselves.
Ryanair are successful and well capitalised and no less worthy of a bailout than some former flag carrier which is now owned by British  Airways' holding company.


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## Leo (15 Apr 2020)

Long thread detailing mine and others experience with AL support here.


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