Aer Lingus board backs IAG takeover

‘Compelling commercial logic’ for airline to become part of IAG, says chairman

Aer Lingus chairman Colm Barrington said the  the move would have significant benefits for the Republic. Photograph: Alan Betson/The Irish Times
Aer Lingus chairman Colm Barrington said the the move would have significant benefits for the Republic. Photograph: Alan Betson/The Irish Times

The Aer Lingus board believes there is a "compelling commercial logic" for the company to become part International Consolidated Airlines' Group (IAG), which is prepared to pay €1.36 billion for the partially State-owned carrier.

IAG, owner of British Airways, Iberia and low-cost carrier Vueling, has been circling Aer Lingus since December and last month won the board's backing for a proposed €2.55 a share offer for the airline.

In a statement yesterday, Aer Lingus chairman Colm Barrington said the board has a strong view that the prospect of becoming part of IAG has a “compelling commercial logic”. He added that the move would have significant benefits for the Republic and supports the Government’s policy of having two domestically-based airlines.

It is understood the board issued the statement because it felt it was necessary to clarify its position following several days of heated political debate about the possible impact of selling the State's 25.1 per cent share in the airline, particularly on regional airports such as Cork and Shannon and their services to London's Heathrow Airport . "Over recent weeks the board of Aer Lingus has listened carefully to the public debate which has taken place regarding IAG's proposal," Mr Barrington said.

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“We have had further detailed discussions with IAG and the board has a greater understanding of IAG’s intentions for the future of Aer Lingus and the proposed commitments that IAG is prepared to make in relation to Aer Lingus. These discussions have further confirmed that it is clearly in IAG’s interests to continue to grow Aer Lingus within the IAG group.”

The statement confirmed that the board of the Irish airline met the group of officials and advisers appointed by the Government to review the IAG proposal on Wednesday and set out its views on the benefits of a deal.

These include enhancing Ireland’s position as a natural hub for transatlantic travel, accelerating Aer Lingus’s long-haul growth plans, boosting employment and strengthening the air access to and from the State.

IAG's Irish chief executive, Willie Walsh, spent two days in Dublin this week trying to win the support of Government officials, the Minister for Transport, Paschal Donohoe and Oireachtas members for his company's bid for Aer Lingus.

The group's proposed offer hangs on the Government agreeing to sell its shares and on Ryanair parting with its 29.8 per cent holding.

However, the level of political opposition is known to have left the Coalition feeling nervous about the fall out from a sale.

Much of the opposition is focused on Aer Lingus’s Heathrow access.

Barry O'Halloran

Barry O'Halloran

Barry O’Halloran covers energy, construction, insolvency, and gaming and betting, among other areas