The Irish government on Tuesday agreed to sell its 25 percent stake in Aer Lingus Group PLC to International Consolidated Airlines Group’s (IAG), paving the way for the owner of British Airways PLC and Iberia SA to make a formal bid for the Irish carrier.
IAG’s proposed 1.36 billion euro (US$1.48 billion) offer for Aer Lingus was recommended by the Irish airline’s board of directors in January, but is still conditional upon receiving the support of its other main shareholder, Ryanair Holdings PLC.
“There is a number of extremely important changes that have led to this decision by [the Irish] government today,” Irish Minister for Transport, Tourism and Sport Paschal Donohoe told a news conference after a Cabinet meeting.
Photo: AP
DUBLIN’S DEMANDS
In February, Dublin presented IAG with a list of new demands that it said had to be met before it would consider the sale, in areas including possible job cuts, transatlantic services and a longer guarantee on maintaining connections between Irish airports and London’s Heathrow Airport — the hub of British Airways — where Aer Lingus holds valuable runway slots.
Formally presenting its offer of 2.55 euros per share, IAG committed to Aer Lingus operating routes from Heathrow to Irish airports for at least seven years.
NETWORK GROWTH
“Acquiring Aer Lingus would add a fourth competitive, cost-effective airline to IAG, enabling us to develop our network using Dublin,” IAG chief executive Willie Walsh said in a statement.
Donohoe said Aer Lingus did not foresee any compulsory redundancies, despite the potential loss of 50 jobs next year, adding that the airline could add up to 635 new jobs by 2020.
The Irish government would spend the 335 million euros it receives on infrastructure projects, he added.
Ryanair still has to declare its hand. It declined to comment again on Tuesday on whether it would accept an offer by IAG for its 30 percent stake.
Aer Lingus, whose shares closed 1 percent higher at 2.39 euros on Tuesday in London trading, welcomed the decision, reiterating that it was a compelling transaction for the former flag carrier.
UNION RESISTANCE
The Irish government, which has been urged by opposition parties and trade unions to reject the IAG offer and also faced objections to it from some members of parliament, had said that Ryanair’s attitude was key to its decision.
Aer Lingus’ main trade union, IMPACT, reiterated after Dublin’s announcement that the deal was bad for workers.
A second major union, SIPTU, said it wanted commitments on compulsory redundancies and outsourcing.
Ireland’s ruling coalition was expected to put the decision to a vote in parliament as early as yesterday. In a joint statement, lawmakers from the Labour Party previously opposed to the sale said the deal was a positive outcome.
Two lawmakers from Donohoe’s Fine Gael Party who had previously expressed reservations about the deal told reporters that they would likely support the sale.
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