A GROUP led by Aer Lingus pilots that bought 2 per cent of the airline in an effort to frustrate Ryanair's takeover bid in the autumn of 2006 lost nearly €5 million on its shares last year, new filings reveal.
Tailwind Nominees, which has about 590 members, acquired Aer Lingus shares at a cost of €25.21 million but saw their valuation decline by €4.96 million in the year to September 2007 in line with the drop in the share price of Aer Lingus in that period.
Newly filed abridged accounts for Tailwind record a net loss of €5.91 million in the fiscal year and a €5.91 million deficit on its balance sheet. "These conditions would cast doubt about the company's ability to continue as a going concern if it were not for the relationship between the Tailwind Participation Trust and Tailwind Nominees Ltd," the accounts say.
Aer Lingus pilots own a majority stake in the trust, which is the ultimate owner of the investment firm. The trust also includes certain cabin crew in the airline and a number of Ryanair pilots.
Members of the Irish Airline Pilots Association make contributions to the trust which are in turn invested in Aer Lingus shares. The Tailwind accounts show that the group's members made lump sum contributions totalling €16.3 million and quarterly contributions totalling €2.35 million.
In addition, the group raised a €10 million loan from Bank of Scotland (Ireland) in October 2006. On foot of that loan, the bank has a charge over 6.83 million Aer Lingus shares held by the company. At yesterday's closing price of €2.02, those shares were worth €13.8 million.
Pointing to the company's net loss and the deficit on its balance sheet, auditors CCMG said such conditions "indicate the existence of a material uncertainty which may cast doubt about the company's ability to continue as a going concern". The auditors went on to say that the financial statements "did not include the adjustments that would result if the company was unable to continue trading as a going concern".
Tailwinds is not the only vehicle through which Aer Lingus pilots and other staff have an interest in its shares. The Aer Lingus employee share ownership trust owns 14.4 per cent of the airline. In addition, the pension fund for Aer Lingus pilots owns about 2.5 per cent of the airline's equity.
While its takeover bid was ultimately thwarted, Ryanair remains the biggest individual shareholder in Aer Lingus with a 29.4 per cent stake. The Government owns a 25.4 per cent stake.
