Business Irish

Wednesday 22 November 2017

Etihad eyes government stake in Aer Lingus

Getty Images
Getty Images

Siobhan Creaton

MIDDLE Eastern airline Etihad is eyeing up Aer Lingus with reports it has told the Government it will buy its 25pc stake.

Etihad refused to comment on what it described as "speculation" about a possible deal but confirmed its chief executive James Hogan met with Taoiseach Enda Kenny last week for about half-an-hour before the Dublin Economic Summit.

"We talk regularly and frequently to many airlines and a range of other businesses from all over the world about issues and opportunities," Etihad said yesterday.


Transport Minister Leo Varadkar did not comment on a sale to Etihad but said he had received a lot of expressions of interest since the Government said it would be selling its stake. "There has been considerable interest both from other airlines and from investors," Mr Varadkar said.

Aer Lingus said the sale was a matter for the shareholder.

News of the Etihad discussions gave a boost to the Aer Lingus share price as investors weighed up the prospect of a deal.

The shares closed 15pc higher at 73c in Dublin yesterday.

Mr Varadkar has previously signaled he would not consider selling the shares for less than €1 each -- valuing the stake at €132.4m and the entire airline at €529.6m. British Airways' parent company International Airlines Group has long been mentioned as a likely buyer for the government shares.

The airline's boss, though, has publicly dismissed its interest in Aer Lingus.

"We've made no secret that there are airlines that we're interested in at the moment, but Aer Lingus is not one of them," he said recently.

Aer Lingus's biggest shareholder is its fierce rival Ryanair, which owns almost 30pc of the shares.

The low-cost airline staged a dramatic dawn raid buying a big chunk of Aer Lingus days after the shares started trading on the stock market in October 2006 to block another airline from doing the same.


Within Ryanair the swoop on Aer Lingus was known as "Operation Bargepole" because its boss, Michael O'Leary, liked to describe it as a "small regional airline" that he wouldn't touch "with a bargepole".

Since then Ryanair has failed to take over Aer Lingus twice because of objections from the Government and the European competition authorities.

It has been a troublesome shareholder and could sell its shares to whoever buys the Government's stake.

This would give the new owner control of Aer Lingus.

Etihad has been operating from Dublin since July 2007 with 10 flights a week from Terminal 2 and has carried 640,000 passengers from Ireland since it began this service.

It also has an agreement with Aer Arann to provide customers travelling from Cork, Galway and the Isle of Man with greater access to 65 destinations around the world through Etihad's Abu Dhabi hub.

The airline is also in talks with Virgin Atlantic on a partnership agreement if it bids for BMI, which is being sold by its parent, Lufthansa.

Mr Varadkar has said any sale would have to include a clause to ensure a new owner would retain the valuable Aer Lingus slots at Heathrow for access to Irish airports.

Issues surrounding the more than €400m deficit in the Aer Lingus pension would also need to be addressed as part of any share sale.

Irish Independent

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