British Airways’ parent company has stepped up its pursuit of Aer Lingus by offering to make legally binding commitments to preserve the Irish carrier’s brand and presence at Heathrow, hoping to assuage government fears in Dublin.
IAG last week made an improved £1.1bn bid for Aer Lingus but the Irish government, which owns a 25% stake, had been resisting a sale without guarantees over future connectivity.
The new proposals would, according to IAG, give Dublin greater protection over the airline’s future than it has now. IAG would guarantee that Aer Lingus’s vaulable 23 Heathrow take-off and landing slot pairs will not be sold – including to BA – and that they will be operated on Irish routes for the next five years. IAG would also guarantee to keep Aer Lingus’s brandname and to maintain its headquarters in Ireland.
Willie Walsh, IAG’s chief executive, said: “We are committed to maintaining and strengthening Aer Lingus. We want to develop air services that ensure Ireland’s connectivity is enhanced.
“In seeking the support of the Irish government, we propose to offer it legally binding commitments that go well beyond the protections currently available to it. These commitments would give the Irish government an important role that they do not have today in securing the future of Aer Lingus.”
IAG said Aer Lingus would benefit from being part of its consolidated group, including joining the oneworld alliance, while being a separate business. In particular, it sees more opportunities in marrying up BA’s transatlantic joint venture with American Airlines with Aer Lingus’s traffic flow, which has the advantage of US immigration pre-clearance in Ireland.
The Aer Lingus board has indicated that IAG’s offer of €2.55 (£1.92) per share would be acceptable to shareholders, but the takeover is being held up by concerns in Ireland.
Attempts by Ryanair, a 29.9% shareholder, to buy up the airline in the past have fallen foul of competition authorities. Michael O’Leary, Ryanair’s chief executive officer, told the Irish Independent that the government should “stop faffing about with its stake” and sell, and added that concerns over Heathrow slots were “hysterical nonsense”. He said: “The sooner the Irish government sells out … the better it would be for Aer Lingus as well as the Irish consumer.”
IAG made an initial bid for Aer Lingus, where Walsh started his aviation career and became chief executive, in December. The Irish flag carrier had recently raised its profits forecast and has apparently returned to health after the depths of the financial crisis, with growing transatlantic routes.
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