Dublin poised to clear IAG offer for Aer Lingus shares
The Irish government could approve the sale of Aer Lingus as early as Tuesday after its advisers recommended that it should accept an offer for the state’s 25 per cent stake in the flag carrier from International Airlines Group.
The cabinet is to study the recommendation at its weekly meeting on Tuesday, Enda Kenny, the prime minister, said. People close to the matter said the government believed it had won significant concessions from IAG about the future of Aer Lingus’s take-off and landing slots at Heathrow airport — the main stumbling block to the acquisition.
IAG, which owns British Airways and Iberia, first approached Aer Lingus with a takeover offer at the end of last year and made an indicative approach in January that valued the airline at €1.36bn. But it has said any final offer it makes is conditional on acceptance by the Irish state and by Ryanair, the rival Irish carrier that owns 29 per cent of Aer Lingus.
The government advisers are understood to have recommended that the takeover price is a fair one. If the government approves the deal today, it must still face a vote in parliament, where opposition political parties are fiercely opposed to the sale of the Aer Lingus stake.
However, today’s development will bring to an end six months of delicate negotiations between Irish government ministers and Willie Walsh, IAG’s chief executive, over the terms on which the Aer Lingus stake would be sold. Mr Walsh, a former boss of Aer Lingus, said at a lunch in Dublin last week that he was “in no hurry” to get the deal done.
The main attraction for IAG and Mr Walsh is the prospect that Aer Lingus can expand its transatlantic services from Dublin airport, which, unlike Heathrow, has spare runway capacity. But the deal was always dependent on getting agreement on maintaining Aer Lingus’s Heathrow slots for flights to and from Ireland.
IAG has agreed to maintain the slots for seven years, two more than its initial five-year pledge. In return, it will receive some comfort over the level of airport charges, particularly in the last two years of the guarantee. IAG will also agree to maintain a minimum number of flights out of Cork and Shannon — currently at three a day out and four a day respectively — to assuage local concerns over the future for these regional airports, one person close to the subject said.
The government had demanded a 10-year commitment.