Monday 23 October 2017

Why is Govt snubbing Etihad over Aer Lingus?

ETIHAD boss James Hogan has reiterated his company's interest in purchasing the Government's 25 per cent Aer Lingus stake. However, eight months after allegedly putting the shareholding up for sale, the Government seems curiously reluctant to sell.

Aer Lingus was just one of a job lot of State assets put up for sale at the insistence of the Troika last February. The sale list also included the harvesting rights to some of the Coillte forests, the Bord Gais energy distribution business and some "non-core" ESB generating plants.

Eight months later, there is still no sign of a deal. Whatever about the other State-owned assets being put on the auction block, a sale of the Aer Lingus stake should in theory be relatively straightforward.

Its shares are traded on the Stock Exchange and, at the current €1.09 share price, they are comfortably above the €1 level at which Transport Minister Leo Varadkar has stated he is prepared to sell.

So why, despite having declared his interest in buying the shareholding at least three times in the past eight months, has the Government not bothered to contact Mr Hogan? Etihad already owns a 3 per cent Aer Lingus stake.

Surely the fact that Mr Hogan isn't deterred by the huge hole in the pension fund Aer Lingus shares with the DAA (at least €750m) -- plus the fact that he isn't Michael O'Leary -- makes him an ideal purchaser?

It's no secret that the Government was strong-armed into announcing its plans for asset sales by the Troika.

Is it now dragging its feet, ostensibly putting State-owned assets on the block while doing all it can to ensure that no buyers actually emerge?

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