THE GOVERNMENT has decided to press ahead with the sale of its 25 per cent stake in Aer Lingus, The Irish Times has learned.
This would be subject to it receiving a premium to the current value of the holding, which stands at €89 million. It is not expected that the stake would be sold this year.
It is understood that the Government has decided to undertake an analysis of the value of this stake and the potential interest from airline groups and other investors.
The National Treasury Management Agency is expected to have a role in this process.
Minister for Transport Leo Varadkar last week indicated that Aer Lingus was on a list of State assets that could be sold. This list was presented to the Cabinet late last week and it has now decided to proceed with the potential sale of this asset.
Informed sources said last night any sale would involve clauses that would protect Aer Lingus’s valuable Heathrow slots being used for access to Irish airports and would also ensure a continuance of the brand name.
A number of groups are believed to have expressed an interest in the Government’s stake since Mr Varadkar’s comments last week. Analysts have speculated that interested parties may include Air France, Germany’s Lufthansa, and International Airline Group, the holding company for British Airways and Iberia that is run by Irishman and former Aer Lingus chief executive Willie Walsh.
Valuing Aer Lingus will not be straightforward. Its shares traded at 66.6 cent apiece in Dublin yesterday, but this does not recognise much of the value in the business.
It has net cash reserves of €358 million, which equates to 67 cent a share.
It also has a valuable fleet of new, fuel-efficient aircraft and landing slot rights at major airports in Europe and America, including Heathrow and JFK in New York.
On the flip side, a question mark hangs over Aer Lingus’s potential liability for a €400 million pension deficit on a scheme operated jointly with the Dublin Airport Authority and SR Technics.
The Government will not sell its stake to Ryanair, which owns 29.8 per cent of Aer Lingus. Ryanair chief executive Michael O’Leary yesterday restated that it would not bid for the State’s stake “if any such offer would be regarded as unwelcome”.
He said Ryanair would “welcome” the sale of the stake to another “financially strong airline or investor”.
Alternatively, Ryanair would “be happy to enter into negotiations with such a shareholder for the disposal of its stake” subject to agreement on price, he added.
Ryanair has failed with two offers for Aer Lingus since 2007. These valued Aer Lingus’s shares at €2.80 and €1.40 a share respectively.
