Outgoing Aer Lingus chief executive Christoph Mueller could cash in almost €3 million worth of share options if the airline is sold ahead of his departure next year.
The Aer Lingus board turned down an approach from rival British Airways’s parent, International Consolidated Airlines’ Group (IAG) on the basis that it undervalued the company, but some sources believe that it may make a further bid for the Irish carrier.
Aer Lingus has granted Mr Mueller, who is due to leave in next year to take the helm at Malaysia Airlines, 1.5 million share options, worth almost €3 million at its share price yesterday under a long-term incentive plan.
While he gets the right to take up these options only if he meets certain targets, the Aer Lingus annual report states that the company may award them if there is a change of ownership.
Performance
The options prices allow him to exercise the shares at a total of €1.07 million, around one third of their price on the Dublin market yesterday. Of the total, one million options have vested, but not been exercised, while a further 500,000 are pending, subject to him meeting performance criteria.
The annual report also points out that the airline must seek shareholder approval if its wants to sell any of its slots at Heathrow Airport. These assets, essentially the right to land at and take off from the airport, are thought to be a key reason for IAG’s interest in Aer Lingus.
Maintaining the slots, which are seen as key to the Republic’s international accessibility, was one of the factors behind the Government’s decision to retain a 25 per cent strategic shareholding in the airline when it floated in 2006.
Dominant
The report states that if Aer Lingus wishes to sell any of the slots, it must first notify shareholders. Investors representing 20 per cent or more of the company’s shares can then demand that the company call an extraordinary general meeting to approve such a sale.
Acquiring Aer Lingus’s slots would consolidate IAG’s position as the dominant player in Heathrow, which is Europe’s biggest international hub.
Davy said yesterday that the bid “has strategic merit and is in line with the former’s [IAG’s] €2.5 per share was justified based on operating margins and other factors.
“We believe that the attraction of Aer Lingus for IAG is its strategic growth out of Dublin (now Europe’s seventh-largest transatlantic hub) together with the flexibility around the enhanced Heathrow slot position while maintaining/enhancing a full Dublin-London ‘shuttle’ service (similar to Madrid),” they said.
