Sunday 22 April 2018

Aer Lingus sale: IAG adds veto to list of concessions

Mr. Paschal Donohoe, T.D. Minister for Transport, Tourism and Sport is welcomed by Anne Bonnar, Airport Manager and Michael McLoone Chairman of Donegal Airport as he arrived in Donegal Airport to officially open the Aer Lingus Regional service between Donegal and Dublin. Photo: Brian McDaid
Mr. Paschal Donohoe, T.D. Minister for Transport, Tourism and Sport is welcomed by Anne Bonnar, Airport Manager and Michael McLoone Chairman of Donegal Airport as he arrived in Donegal Airport to officially open the Aer Lingus Regional service between Donegal and Dublin. Photo: Brian McDaid
Mr. Paschal Donohoe, T.D. Minister for Transport, Tourism and Sport pictured as he arrived in Donegal Airport to officially open the Aer Lingus Regional service between Donegal and Dublin. Photo: Brian McDaid

John Mulligan and Niall O'Connor

THE Aer Lingus deal remains in serious doubt despite a range of guarantees offered to the Government by airline group IAG.

The aviation giant has made a concerted effort to allay concerns over the sale of Aer Lingus – but political sources still believe the bid is doomed.

IAG promised a number of concessions, including vowing not to sell critical slots at London Heathrow without Government approval.

It is understood that Chambers of Commerce in Dublin, Shannon and Cork could also share this veto on the sale of the Heathrow slots, in an attempt to allay fears about the takeover.

But a lack of guarantees on jobs at Aer Lingus is seen as a major stumbling block.

The Government currently controls 25.1pc of Aer Lingus and holds the key to the €1.4bn deal. In a detailed submission to the Department of Transport, IAG promises that:

• Aer Lingus’s 23 slot pairs at London Heathrow will not be sold, including to other IAG airlines.

• Aer Lingus’s name, head office location or place of incorporation in the Republic of Ireland will not be changed.

• It is committed to operating the Heathrow slots on Irish routes for five years.

IAG – which also owns British Airways and Iberia – said that this final commitment is a pledge the Government does not currently have.

It is also understood that the submission seeks to address the concerns that have been raised about Aer Lingus services from Cork and Shannon.

Members of a review group established by the Department of Transport will meet IAG’s representatives either tomorrow or Thursday.

But, despite the concessions, ministers in both Government parties were adamant that the deal will not be supported.

Senior Labour Party sources insisted that the pledges from IAG "do nothing to address the concern about jobs" and that the five-year guarantee on the Heathrow slots is "time bound".

A number of Fine Gael ministers said the offer has very little chance of being accepted.

Meanwhile, members of Labour's so-called 'Aer Lingus seven' are preparing to submit an emergency motion at the party's annual conference later this month, aimed at ensuring the party adopts a policy that opposes the selling of the State's stake.

Mr Walsh has insisted IAG will grow Aer Lingus if it succeeds in buying it.

"In seeking the support of the Irish government, we propose to offer it legally binding commitments that go well beyond the protections currently available to it," said Mr Walsh.

"These commitments would give the Irish government an important role that they do not have today in securing the future of Aer Lingus.

"We are committed to maintaining and strengthening Aer Lingus. We want to develop air services that ensure Ireland's connectivity is enhanced."

It is understood that Cork, Shannon and Dublin Chambers of Commerce would be offered a role in deciding the future of Heathrow slots under the proposals. They would likely have to agree with the Government in order to implement any veto on the sale of these slots.

Transport Minister Paschal Donohoe said he would examine the details of the IAG submission "very carefully".

But he refused to go as far as Taoiseach Enda Kenny by demanding "lifetime" guarantees on the future of Aer Lingus if the company is sold to IAG.

He was speaking at Donegal airport in Carrickfinn after taking the inaugural Aer Lingus Regional flight from Dublin.

He added: "I expect to see further contact between my own department and IAG this week so we can further understand the nature of the proposal."

It is not known yet for certain whether Mr Walsh will attend the meeting with the department's advisers.

However, it is believed he will be available if required.

A key issue is that Mr Walsh's announcement made no mention of jobs at Aer Lingus.

That was seized upon by trade union IMPACT.

"What really stands out in the statement by IAG is the complete absence of any reference to jobs," said IMPACT national secretary Matt Staunton.

"We've highlighted a substantial risk of job losses at Aer Lingus if it's acquired by IAG," he claimed.

"There's nothing in IAG's statement that lessens our concerns about Aer Lingus jobs."

However, financial analysts predict there is substantial scope for job growth in the future under IAG ownership.

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business