Business Irish

Saturday 25 May 2019

Aer Lingus promises on routes key to takeover bid

Paschal Donohoe
Paschal Donohoe

Thomas Molloy

The takeover of Aer Lingus and British Airways parent company IAG depends upon promises being made to continue services from regional airports across the country.

IAG are set to announce this morning that they have finally agreed to a €1.33bn takeover of the Irish airline by a foreign consortium.

Any deal will be dependent on the Government, which will meet tomorrow to discuss the takeover's implications.

The Aer Lingus board supports a deal on those terms pending final details, a source said yesterday.

But Coalition sources say Government backing will only be given if there are clear commitments on flights from the regional airports.

Aer Lingus currently flies from Dublin, Belfast City, Shannon, Cork, Knock and Donegal airports. The highly lucrative Dublin routes are regarded as safe, but a question mark over the rest would emerge.

"Continuing the connections from the regional airports will be up there, along with share price," a Coalition source said.

"Dublin has got the critical mass. It will depend on the regional response to the bid."

Concerns about the future of Shannon and Cork airports, in the event of a takeover dominated a Fine Gael meeting last week.

The coveted Heathrow slots will also be high on the agenda.

The formal bid from IAG is expected to contain promises to protect the regional routes for up to five years.

IAG, which owns the Spanish carrier Iberia as well as British Airways, has been seeking a deal with Aer Lingus to gain access to its valuable take-off slots at Heathrow Airport and to develop Dublin as a secondary hub for trans-Atlantic flights.

Aer Lingus is the fourth busiest operator at London's Heathrow behind British Airways, Lufthansa and Virgin Atlantic.

IAG previously offered €2.30 a share and then €2.40 a share but was rejected by Aer Lingus.

While the Aer Lingus name and livery will remain, control of the airline with move abroad; something that has led several government ministers to express doubts about the deal.

With a 25pc stake, the Government has enough voting rights to prevent any takeover and the focus will now shift to tomorrow's Cabinet meeting where Transport Minister Paschal Donohoe will brief colleagues on the ramifications of the deal.

Mr Donohoe, who represents a north Dublin constituency with many airport workers, said yesterday that the Government will look at issues such as the slots at Heathrow Airport, and that job security at Dublin, Shannon and Cork airports will also be considered.

Tanaiste Joan Burton said direct airline connections were critically important for investment in the country and for tourism and that "connectivity" is vital for people in Ireland.

"The flights into Heathrow are of enormous value to Ireland," she said.

Ryanair, which owns a bigger stake than the Government and can also block the deal, said last week that it would be interested in buying any slots.

IAG chief executive Willie Walsh is a former boss at Aer Lingus, so Government sources believe he is aware of the sensitivities around the regions.

Irish Independent

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