Sunday 28 May 2017

Aer Lingus in firing line in €5bn state assets sale

Getty Images
Getty Images

John Mulligan and Fiach Kelly

THE IMF has called on the Government to double the amount it plans to squeeze out of state asset sales as Transport Minister Leo Varadkar said the State may sell its 25pc holding in Aer Lingus to raise money.

In a report issued in Washington yesterday, the IMF said the Government should raise around €5bn from asset sales or more than twice the €2bn target laid out in the programme for government.

The Government would be forced to sell off a raft of state assets to meet the IMF's higher target.

Energy Minister Pat Rabbitte said last week he is considering a partial sale of the ESB and other assets are also under consideration.

Larger sales

A final decision will be taken by the end of the year following detailed consultation with the IMF and Europe. The IMF is demanding far larger sales of state assets from the other bailout nations.

The exchequer would get around €90m if the State sold its stake in Aer Lingus tomorrow -- a fraction of the €375m offered by Ryanair for the stake when the company tried to buy the entire airline five years.

"We're committed under the programme for government to find at least €2bn in state asset sales and obviously the troika would like us to go further than that," Mr Varadkar said yesterday on the last day of the Fine Gael 'think-in' in Galway.

The Cabinet will meet today to discuss a draft memo on privatisation plans. Mr Varadkar added that there's no longer a strategic case for retaining the State's stake in Aer Lingus.

"A number of things are under consideration, certainly the energy companies and the aviation sector as well," he said.

"No decisions are made, but that's definitely one of the candidates."

He said that "in principle" he'd have no problem selling the holding. However, it's likely to be some time before any sale is actively considered -- and finding a trade buyer would be far from easy, with Aer Lingus ranking low among attractive international airline assets.

Aer Lingus chief executive Christoph Mueller has previously said he'd welcome the departure of the Government from the airline's share register.

"Maybe we are a bit of a late developer,'' he said earlier this year. "But after 75 years, I believe we are ready to finally leave the parents behind.''

Ryanair said yesterday it would welcome another strong airline or investor acquiring the Government's Aer Lingus stake.

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