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Government to take 'great care' of any formal takeover bid for Aer Lingus

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Aer Lingus

Aer Lingus

Aer Lingus

The government will take “great care and exercise great caution” in weighing up any formal takeover bid that emerges for Aer Lingus by British Airways owner IAG, Transport Minister Paschal Donohoe has told the Dail.

He said the government, which owns 25.1pc of Aer Lingus, will bear in mind the “same issues” it considered when faced with previous takeover bids by Ryanair.

There have been concerns that a takeover of Aer Lingus by IAG could result the number of services to London’s Heathrow airport from Ireland being curtailed.

The Minister also said that the government will consider the value put on the State’s stake in Aer Lingus in any formal offer that’s made.

But he also stressed that if an offer is made by IAG or any other party, policy matters such as competition and connectivity will be “carefully considered before any decision is made on the future of the State’s shareholding in Aer Lingus”.

IAG, which is headed by former Aer Lingus chief executive Willie Walsh, has tabled an indicative offer to buy the Irish airline for €2.40 per share, valuing it at just under €1.3bn. Before Christmas, it offered €2.30 a share.

The €2.40 indicative offer values the government’s Aer Lingus holding at €321.7m. Ryanair owns 29.8pc of Aer Lingus, and has said that it remains open to offers for the stake.

The Aer Lingus board, headed by chairman Colm Barrington, has rejected both indicative offers from IAG, saying they don’t adequately value the airline or its prospects.

“We will consider the impact any change in ownership of Aer Lingus would have on the connectivity of Ireland – connectivity that is vital to our economy and our society,” said Minister Donohoe.

“Connectivity remains critically important for Ireland as an island nation,” he said. “Heathrow remains a very important hub for connectivity purposes, but as it becomes more congested other hub options are becoming available, including other European hubs and the rapidly growing Middle East hubs.”

The Minister’s comments were the first detailed response in relation to the IAG approach to buy Aer Lingus.

The Minister also said that the number of destinations that can be reached directly from many of Ireland’s airports has increased over the past number of years.

Shares in Aer Lingus have fallen to €2.37, below the last indicative offer tabled by IAG, as investors await a third offer for the airline.

“We will consider the impact it would have on competition for passengers to and from Irish airports,” he added.

“And we will consider the impact on the bases from which Aer Lingus currently operates, namely our State and regional airports.”

The Minister said he had to be mindful of any comments he makes in relation to the IAG approach to buy Aer Lingus given the airline is now deemed by the Takeover Panel to be in an offer period.

The government rejected Ryanair’s last Aer Lingus takeover bid in 2012, saying it wouldn’t sell its stake in circumstances which could impact competition and connectivity in the Irish market.

“Such considerations would also be foremost in our minds if a further offer is made for the company,” said Minister Donohoe.

Online Editors