Aer Lingus takeover deal not sealed yet
Published 17/04/2015 | 02:30
Transport Minister Paschal Donohoe has insisted that a deal hasn't yet been struck which would enable the Government to approve IAG's €1.4bn takeover of Aer Lingus.
Shares in Aer Lingus soared over 5pc at one point yesterday, as speculation mounted that the IAG and the Government had all but cemented an agreement to sell the State's 25.1pc stake in the airline to IAG.
But the share gains were pared back soon afterwards, as Mr Donohoe said that no accord had been reached yet and that it could still be weeks before the Government made a decision.
"I gave an update to the Cabinet yesterday that discussions are continuing with IAG. I emphasised to my colleagues that this is a matter I want to draw to a conclusion soon," he said.
An IAG spokeswoman said the company had no comment to make.
A steering group, chaired by the Department of Transport, has spent months interacting with IAG executives in order to compile a report that will enable the Government to weigh the pros and cons of a possible takeover.
Mr Donohoe said there had been "useful engagement" between the sides.
Last month, it was widely expected that the Government would be in a position to analyse a completed report and that ministers would be able to make a recommendation just after Easter.
A very likely scenario now is that the Cabinet will make a decision at its meeting on April 28. Aer Lingus holds its annual general meeting on May 1, and would almost certainly have hoped the Government would have acted on the steering group report by that date.
Talks and an exchange of information between the sides have continued in recent weeks.
The sticking point was understood to be the length of guarantee IAG was willing to give in the future use of take-off and landing slots controlled by Aer Lingus at Heathrow.
IAG was willing to offer a pledge that it would use those slots to only serve routes to Ireland for at least five years following a takeover. The Government wants a longer guarantee.
While both sides played hardball on the issue, it's thought that common ground has been explored by the sides where compromise can be reached. Analysts say it's likely that agreement on the issue could result in IAG offering a seven-year promise.
Securing watertight legal constructs to deal with other issues, such as giving the Government a veto over any future sale of Aer Lingus Heathrow slots, are also likely to be drawing the process out.
"It has been ongoing for a while, it is a complicated issue which is very important for the development of Aer Lingus and to our country," said Mr Donohoe. "Whatever decision is made, I want it to be the right one for both and I anticipate that in the coming weeks we will be in a position to do so."