Business Irish

Sunday 25 February 2018

Airline boss Willie Walsh dismisses as utter nonsense warnings of 1,200 job losses if Aer Lingus takeover bid is accepted

Willie Walsh
Willie Walsh

Airline boss Willie Walsh has dismissed as utter nonsense warnings of 1,200 job losses if a £1 billion takeover bid for Irish carrier Aer Lingus is accepted.

The head of the International Airlines Group (IAG), owner of British Airways and Iberia, rejected the trade union claims but admitted redundancies would be made in back office, admin and procurement divisions.

Mr Walsh said about 500 jobs could be created in Aer Lingus - new pilots, cabin crew, engineers and mechanics - if the ambitious takeover is agreed and long haul planes are added to the fleet over the next five years.

He would not be drawn on a figure for potential redundancies.

During three hours of questions at a parliamentary committee in Dublin, the IAG chief executive repeatedly gave commitments to protect the Irish carrier's 23 valuable landing slots at London Heathrow for five years, but no more.

"This is a commitment that does not exist. You don't have any commitment today," he said.

"I don't believe that there is any other party interested in acquiring Aer Lingus - if there is an interested party - that is prepared to give this guarantee."

Read More: Willie Walsh: 'There would be some job losses if IAG buys Aer Lingus deal'

Mr Walsh said the guarantees were being put together by "smart lawyers" and that they would be "cast iron, wrapped in concrete".

The airline chief's appearance at the Irish parliament was part of a two day charm offensive to drum up support for the IAG bid - a £1.90 (2.55 euro) a share offer already accepted by the Aer Lingus board but facing stiff opposition from the Irish Government which holds a 25.1% stake.

Mr Walsh would not discuss the prospect of an alternative deal for IAG to take a majority stake in the airline while allowing the Government to retain its shareholding.

He told politicians that an IAG takeover would keep the Aer Lingus brand and retain the head office in Dublin.

And he pointed to the prospect of the group developing Dublin Airport as a transatlantic transport hub taking advantage of US immigration pre-clearance, Aer Lingus presence in North America, particularly the east coast, and connections with American Airlines.

"Ireland is an attractive market for us," Mr Walsh said.

"We believe it represents a growth opportunity. We think the development of transatlantic services over the Dublin hub represents a real growth opportunity and we can support that better than anyone else."

Mr Walsh dismissed the redundancy threat put forward by the Impact trade union.

"I have heard people say that up to 1,200 jobs could be lost - that's utter nonsense," he told the politicians.

Aer Lingus directly employs 3,900 people, mostly in Dublin, with 2,100 of these in ground staff, clerical, operative and back office roles.

IAG was formed from the merger of British Airways and Iberia in 2011, which saw 2,500 staff leave the Spanish airline under a voluntary redundancy programme.

"Aer Lingus and Iberia are in two completely different places," the IAG boss said.

"Iberia was an inefficient airline that then got trapped in a deep recession that hit Spain. Iberia required serious and committed restructuring. Aer Lingus is not in that position."

Mr Walsh said the procurement division of Aer Lingus would be one area where jobs would ultimately be lost.

"That generates huge value," he said.

"We can negotiate with every supplier in a way that is much stronger than any airline can individually. Aer Lingus can tap into that.

"The value of that is immense.

"I'm not talking about millions, I'm talking about tens of millions, potentially significantly more than that."

The airline chief also revised figures on possible job creation in the event of a successful takeover by growing long haul services, saying the number could be as high as 110 jobs for every new aircraft added to the long haul fleet.

He said this would be complemented by an inevitable increase in short haul services which would be needed to feed an increase in transatlantic flights in and out of Dublin.

Mr Walsh was repeatedly pressed on Aer Lingus operations in Shannon and Cork but he said concerns about their future was misplaced.

He also said he believed Aer Lingus regional services operated on a franchise basis to smaller airports around Ireland could continue in a similar fashion to operations already in place in other parts of IAG including Spain, Scandinavia and South Africa.

The airline chief, who holds 730,000 shares in IAG and 10,616 shares in Aer Lingus, said he will be selling his holding in the Irish carrier if the takeover went through - worth about 27,000 euro (£20,000).

Mr Walsh also rejected any suggestion that a successful takeover, combined with the presence of BA on the Dublin-London route, would create a monopoly in the skies out of Ireland.

"The idea that anybody would grant a monopoly when Michael O'Leary and Ryanair are on your doorstep is a nonsense," he said.

Mr Walsh was joined at the hearing by financial adviser Finbarr Griffin, of Goodbody Corporate Finance, under obligations set down by the Takeover Panel allowing him to field questions.

Earlier, he revealed the business plan involved doubling Aer Lingus's own growth projections by potentially adding two planes to its long haul fleet each year for the next five years.

Yesterday he met Transport Minister Paschal Donohoe, who has authority for the Irish State's 25% stake.

No timetable has been set for the Government to decide on whether to sell its stake but objections from Labour Party backbenchers, the junior partners in coalition in the Republic, is heavily influencing the debate.

Meanwhile, Ryanair, a 29% shareholder in Aer Lingus, has lost its latest attempt to overthrow an order by the UK's competition watchdog.

The airline run by Mr O'Leary said it will apply to the Supreme Court in London for an appeal.

Ryanair claimed the IAG bid for Aer Lingus has undermined the UK's Competition and Markets Authority's (CMA) ruling that it must sell its stake.

Spokesman Robin Kiely said: "As expected we have been refused leave to appeal to the appeals court. We have instructed our lawyers to appeal to the supreme court."

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