Aer Lingus 'will be broken up if Etihad buys government stake'
RYANAIR boss Michael O'Leary said yesterday that Aer Lingus will be "broken up" if Etihad or a financial investor buys the Government's 25.1pc stake in the former state-owned airline.
But the Ryanair chief executive also said that the low-cost carrier "would welcome" any other financially strong airline or investor that acquires the Government's stake. He said Ryanair, which owns just under 30pc of Aer Lingus, could work with the buyer "to restore shareholder value" at its rival.
Mr O'Leary was responding to Etihad's confirmation that it has bought a 2.9pc stake in Aer Lingus in recent weeks.
Etihad declined to comment. However, analysts said there's no reason to believe that Aer Lingus would suffer any detrimental structural shift if the Middle East airline were to buy the Government's stake.
Transport Minister Leo Varadkar yesterday described Etihad's purchase of Aer Lingus shares as a "good thing".
"It is a vote of confidence both in the airline and the Irish economy," he said.
Shares in Aer Lingus closed up 1.8pc yesterday at 99.3 cent, while shares in Ryanair were 2.2pc higher at €4.35.
Ryanair has previously indicated that it would be willing to sell its holding in Aer Lingus to any buyer of the Government's stake subject to an "acceptable agreement on price and maximising shareholder value". Ryanair has made two failed bids for Aer Lingus.
A spokesman for Ryanair declined to say whether the airline would be willing to offload a portion of its stake to any potential buyer, or whether it would enter into a sale discussion on an all-or-nothing basis.
As a non-European carrier, Etihad is prohibited from owning more than 49pc of an EU airline. It already owns just under 30pc of Air Berlin.
British Airways owner IAG had been touted as another potential buyer of the Aer Lingus stake, but after recently completing the purchase of BMI and having expressed an interest in Portugal's TAP, the chances of any move on the Irish carrier are waning.
The chief executive of Qatar Airlines, which had been perceived as another potentially interested party, recently ruled out having any designs on Aer Lingus, saying he would "leave that opportunity to Etihad".
Rapidly growing Middle East airlines are keen to boost traffic flows to their hubs as they take delivery of significant numbers of aircraft from manufacturers Boeing and Airbus.
Aer Lingus, which releases first quarter results tomorrow and holds its annual general meeting on Friday, confirmed yesterday that it's engaged in talks with Etihad about a possible code-sharing agreement.
Such agreements are common in the airline industry. They enable airlines to co-market routes, while customers can buy tickets for each partner's services on either website. Etihad signed a code-sharing agreement with Aer Arann in 2009.
"Aer Lingus and Etihad are engaged in discussions which have a focus on reciprocal code-share opportunities," Aer Lingus said in a statement.
"Future discussions may explore additional commercial and cost opportunities to develop a closer working relationship in areas such as joint procurement."
The airline said it views those discussions as a "natural progression" of its Greenfield cost-saving plan that is taking €100m in annual costs out of the airline.
Etihad operates 10 flights a week to Abu Dhabi from Dublin. It's one of the airline's most successful routes.