Business Irish

Saturday 16 November 2019

EU will have final say on Aer Lingus sale

Willie Walsh
Willie Walsh
Editorial

Editorial

There is an obvious emotional attachment among a majority of Irish people to Aer Lingus, which is still regarded as our national airline - even though only 25pc of the company is owned by the Irish public through the shareholding held by the Finance Minister.

It is this attachment that makes the proposed sale of the Aer Lingus public shareholding a complex issue for the Government, in a way that a takeover bid for Ryanair (were such a thing to happen) would not be.

The issue will be debated at Cabinet today, but already it seems obvious that the Government will wisely allow the European Union to decide the issue for it. If the bid gets the approval of the Aer Lingus board, then the matter will undoubtedly be referred to the EU and the mandarins in Brussels will make the decision on the State's stake.

The dynamic of the proposed sale is that with €1.3bn on the table, the board is likely to give the bid by the Willie Walsh-led International Airline Group (IAG) the nod, on the basis that it is the best deal for shareholders and legally that is its only concern. The Government, on the other hand, has more weighty matters to think about.

As an island nation, we are reliant on airline travel more than most for business, tourism and casual travel in and out of Ireland. The Government may want to stitch in a few conditions before selling its 25pc to protect itself from future criticism. These would include the use or sale of the famous Heathrow slots, the fate of regional airports and overall employment in Ireland by the new entity. In terms of branding, it appears there will be no change and if the deal goes ahead the airline will remain Aer Lingus in name, with its Irish associations and shamrock logo.

Analysts seem to agree that this might be a good time for the State to divest itself finally of the Aer Lingus share - the company is now profitable but the airline business is cyclical and consolidations are more likely to protect its long-term future. The other obstacle to a proposed takeover rests with Ryanair and its mercurial boss, Michael O'Leary, which owns 29pc of Aer Lingus. With little chance of getting EU approval for a takeover of Aer Lingus, because of competition issues, Ryanair is likely to take the pragmatic course and sell to AIG.

Irish Independent

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