Wednesday 18 October 2017

Aer Lingus backs IAG bid for growth

Willie Walsh's plan to expand Aer Lingus may create more new jobs

The Aer Lingus board says the IAG takeover would bring benefits all round
The Aer Lingus board says the IAG takeover would bring benefits all round
Nick Webb

Nick Webb

Aer Lingus has indicated that more jobs will be created if Willie Walsh's IAG is successful in its €1.36bn takeover approach for the former state airline.

While Mr Walsh indicated that 500 jobs could be created at the airline over five years, industry analysts think that this figure is conservative, and say that the final figure could be closer to 1,000. The strengthening of support by the Aer Lingus board increases the pressure on transport Minister Pascal Donohue to sell the State's 25pc stake.

"Additional transatlantic traffic and destinations growth will create significant numbers of new jobs in Ireland: new direct and highly skilled jobs within Aer Lingus and new indirect jobs in support activities and the tourism sector," the airline said last week.

However, shares in the airline dropped last Friday as the market was unmoved by Willie Walsh's charm offensive.

Aer Lingus ramped up its support for the IAG takeover approach, with chairman Colm Barrington saying: "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.

"The board's view is that a combination of Aer Lingus with IAG has a compelling strategic rationale and will deliver significant benefits for Aer Lingus, its employees, its customers and for Ireland."

Merrion Capital aviation analyst David Holohan said that, while there may be initial job losses at the airline, up to 1,000 positions could be created over the next five years.

"I think that any job losses would be in the low hundreds and would be mainly upfront in administration, due to duplication of roles" he said. "In a blue-sky scenario where everything goes IAG's way, I'd say that there could be 750-1,000 jobs created over the next five years, depending on how quickly the airline grows."

Mr Walsh flew into Ireland last week to outline his plans for Aer Lingus, sweetening his offer for the airline by offering further concessions to allays fears over access to Heathrow and job cuts.

The airline said that IAG's proposal can enable Ireland to become a "central hub for European traffic across the Atlantic" The board also said that the deal would see "potential for its planned growth in transatlantic traffic to be significantly accelerated".

Crucially, the Aer Lingus board also backed plans to grow short-haul services, including the key Heathrow slots, saying that the airline "will directly benefit from sales and marketing activity conducted on its behalf by the BA, Iberia, Vueling and Oneworld partner sales forces."

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