Wednesday 22 November 2017

Aer Lingus sale: Boss says airline 'vulnerable' if it's not bought by IAG

Stepehen Kavanagh. Photo: Arthur Carron
Stepehen Kavanagh. Photo: Arthur Carron
John Mulligan

John Mulligan

Aer Lingus will become "increasingly vulnerable" if it's not taken over by British Airways owner IAG, its new chief executive has warned TDs and senators.

Stephen Kavanagh, who'll take over the top Aer Lingus job from March 1, also told the Oireachtas Joint Committee on Transport last night that there would be a "limited" number of job losses if the €1.4bn takeover goes ahead, but that redeployment opportunities would also arise.

But he insisted that employment growth at the airline as a result of a takeover would be significant.

"What we're talking about here is significant increases in employment potential," said Mr Kavanagh. He pointed out that the airline had a voluntary redundancy scheme in place, but was simultaneously hiring for other roles such as pilots and engineers.

Mr Kavanagh insisted that any jobs created following an IAG takeover would be "more sustainable" because they would be built on "stronger foundations".

The new chief executive added that Aer Lingus could survive as a standalone entity, but that it would do so in an increasingly competitive environment.

"It's more challenging than ever because of the global nature of competition. We do serve the island, and if we continue to have that mindset we'll be increasingly vulnerable. It's a constrained market in terms of opportunity."

He said he did not see a takeover deal as a "sell-off" of Aer Lingus and that the offer of €2.55 a share for the airline was greater than the value of the business if it was broken up.

"Aer Lingus is successful by many measures. What's under consideration here is an opportunity that may never be achievable on a standalone basis. The world doesn't stop to allow Aer Lingus to grow," said Mr Kavanagh.

He also pointed out that as an independent entity, Aer Lingus sees "limited" scope for extra services at Shannon.

Aer Lingus chairman Colm Barrington told the committee that the airline's board strongly backed the planned takeover.

"This deal is about accelerated growth," he said. "It provides real prospects for long-term economic growth, for growth in global connectivity, for growth in international trade, for growth in tourism and for growth in employment. I am surprised that it can be represented in any other way."

The Government controls 25.1pc of Aer Lingus, while Ryanair owns almost 30pc.

The appearance of Mr Kavanagh and Mr Barrington at the committee followed testimony given last week by IAG chief executive Willie Walsh.

Sean Brogan, the chairman of Stobart Air, also appeared before the committee. Stobart Air operates the Aer Lingus Regional service under a franchise agreement. He said that Stobart Air would be able to grow faster and on a larger scale if Aer Lingus was bought by IAG.

"Our partnership with a larger airline has enabled us to grow, and has delivered significant consumer and employment benefits to the economy," said Mr Brogan.

Irish Independent

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