Saturday 16 December 2017

Etihad's move on Aer Lingus is no done deal, should US object

THE ink was barely dry on Aer Lingus's letter to shareholders seeking approval for the cancellation of up to €500m of non-distributable reserves (which would allow a special dividend and facilitate a sale of the State's 25 per cent shareholding) before news leaked that Abu Dhabi's Etihad Airways had made an approach to the Government to buy the stake.

The news pushed Aer Lingus shares up by almost 15 per cent to 73¢ last week. Throw in a special dividend and the Government is suddenly within spitting distance of the €1 a share price, below which Minister Leo Varadkar has said the Government won't sell its Aer Lingus stake.

While the sale of even a minority shareholding to one of the major European airlines would see Aer Lingus rapidly subsumed into their operations, bringing in Etihad, which has no existing European operations, largely eliminates that risk.

But that doesn't mean that the deal will happen. One of the attractions Aer Lingus holds for Etihad is that it could fly passengers from the Middle East to Dublin, where they would be pre-cleared by American immigration before continuing to the US. That effectively gives the US a veto over any deal.

Sunday Indo Business

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