STATE ASSETS:MINISTER FOR Transport Leo Varadkar said yesterday that the Government would consider selling its 25 per cent stake in Aer Lingus.
It is one of a number of State assets for potential sale that have been included in a memorandum that will be presented today to Cabinet.
The Government is considering how it might raise up to €2 billion from the sale of assets, as per the programme for government.
Speaking to journalists yesterday on the fringe of Fine Gaels special parliamentary party meeting in Galway, Mr Varadkar said: “It’s certainly under consideration. No decisions are made but it [Aer Lingus] is definitely one of the candidates.”
Mr Varadkar said he was not sure the “strategic” argument to the State’s holding in Aer Lingus applied anymore.
Ryanair, Aer Lingus’s biggest shareholder, said it would not bid for the State’s stake if the Government “believes that any offer from Ryanair . . . would be unwelcome”.
It added that it would “welcome” another “financially strong” airline or investor buying the Government’s stake and working with Ryanair to” restore shareholder value”.
Ryanair also indicated that it “would not rule out entering into discussions” with an interested airline or investor about the disposal of its 29.8 per cent stake. This would be “subject to an acceptable agreement on price”, it added.
Ryanair has been unsuccessful with two bids for Aer Lingus in the past four years.
Mr Varadkar’s comments appeared to blindside Aer Lingus. The airline declined to comment yesterday. But sources indicated that it had no knowledge that the Minister would be making his comments.
It is understood that officials at the Department of Transport gave no indication to the airline that a sale of the State’s holding might be in the offing when the two sides met last week as part of Aer Lingus’s investor roadshow after the publication of its interim results.
Aer Lingus’s share price rose by 6 per cent following the Minister’s comments and Ryanair’s statement. The shares closed at 66 cent apiece, valuing the State’s holding at €88.1 million. However, the Government would likely seek a significant premium on this valuation before selling its shares.
Aer Lingus has net cash of €358 million on its balance sheet. This equates to 67 cent a share.
It also has significant aircraft assets and potentially valuable landing slots at London Heathrow and JFK in New York.
Analysts at Credit Suisse suggested that International Airline Group, the Willie Walsh-led holding company for British Airways and Iberia, might be interested in Aer Lingus.
“BA parent IAG is the most likely to have [the] strongest appetite in accessing” Aer Lingus’s 23 daily slots at Heathrow, Irish-born analyst Neil Glynn said.
Aer Lingus last week indicated it would make a profit this year and yesterday reported a 4.1 per cent rise in passenger numbers for August.
