Business Irish

Tuesday 23 January 2018

Willie Walsh: 'There would be some job losses if IAG buys Aer Lingus deal'

John Mulligan

John Mulligan

British Airways chief Willie Walsh has offered his strongest assurances yet to Dublin, Cork and Shannon airports that he will maintain air links to Heathrow, if he buys Aer Lingus.

In an interview with the Irish Independent, the IAG boss insisted that the deal isn’t dead, and remains certain he can convince the Government to sell its 25.1pc stake in Aer Lingus, as he begins a charm offensive to seal the planned €1.4bn takeover.

“I wouldn’t be in Dublin if I didn’t believe it was possible,” Mr Walsh said.

“We’re here to demonstrate that this is something we are committed to. It’s a deal that we want to do.”

In an interview, Mr Walsh spoke about:

• The future of routes from Heathrow to Dublin as well as Cork and Shannon;

• The veto being offered to the Government on disposal of valuable Heathrow slots;

• His belief that “cast-iron” guarantees can be offered to seal the deal.

Speaking to Seam O'Rourke this morning, he said there would be some job losses in administration, due to replication occurring elsewhere in the company.

However he said this would be offset as jobs are created elsewhere by the deal.

Mr Walsh told the Irish Independent he is certain the political will exists to do a deal, despite the massive opposition that’s been voiced over the past couple of weeks.

“That’s clearly the challenge for the politicians – do they have the political will to see it through. I think we’ve made a proposal that represents good value to shareholders,” said Mr Walsh. He added: “It’s an attractive deal for Aer Lingus, the Government and for Ireland.”

The airline chief was grilled by TDs and senators this afternoon at the Oireachtas Joint Committee on Transport.

Members of the committee, such as Fianna Fáil TD Timmy Dooley, are opposed to an Aer Lingus takeover.

Significant concerns have been raised about IAG's plans for routes from Cork and Shannon to London Heathrow if it succeeds in buying the Irish airline.

Read more: Ryanair faces Aer Lingus ruling in UK today

But IAG boss Willie Walsh, who also met Transport Minister Paschal Donohoe yesterday, said he cannot understand why people are worried.

"There's no reason why anyone should have any fear whatsoever," he said. "I would be shocked if the Cork-Heathrow route is not a very profitable route for Aer Lingus. "I don't think Cork has anything to worry about. Right through the recession, Cork-Heathrow has had very good demand."

He added that Shannon-Heathrow has seen a decline in traffic, which he doesn't "fully understand".

Mr Walsh said the Transport Minister told him of the same concerns he has voiced publicly - including the Heathrow slots, connectivity and jobs. He said: "I'd like to think they left the meeting with some new and very interesting points we were able to make, particularly the value of our joint business with American Airlines."

He said this could bring employment at Aer Lingus and Dublin Airport, and boost jobs and tourism. "This is a proposal that nobody else can match and must be attractive in terms of what it can do for Aer Lingus and the Irish economy."

Mr Walsh has already offered the Government a veto over any future sale of Aer Lingus slots at Heathrow and also said that they will only be used to service Irish routes for at least five years after a takeover.

Read more: BA's Bulldog revelling in the chase

"What I'm prepared to do is give a guarantee that most business people would not be prepared to give. We're in a position where we can guarantee the ownership of the Heathrow slots within Aer Lingus - something that nobody else looking to acquire Aer Lingus would be prepared to give."

He also said that he can see "no reason" why Aer Lingus would not be using slots to service Cork and Shannon five or even 10 years after a takeover.

"There is a strong commercial justification for operating those routes," said Mr Walsh.

And he insisted that the guarantees can be legally enforced.

"We will put in a legal, cast-iron guarantee that those slots can't be disposed of without the Government's approval. We have proposed a structure that would allow for that to be legally binding."

He also claimed that just because one pair of take-off and landing slots at Heathrow might sell for $60m, that doesn't translate into an overall value for all slots.

"I find it quite funny - people are saying there's a value on these slots if you sell them. But nobody wants to sell them.

"We're not trying to sell them. We're trying to operate them. The value in the slots is in operating them, not selling them.

"A price you get for one individual slot does not translate into what you would get for a bunch of them," he said.

Read more: No plane sailing for Paschal with Aer Lingus bid in balance

Mr Walsh insisted that politicians can be convinced if they're open to the facts.

"If you could get $60m for every slot at Heathrow, you'd have a lot of people selling slots. Most slots in Heathrow trade for significantly less than that.

"Nobody is proposing Aer Lingus should sell those slots."

Mr Walsh said IAG had started seriously exploring an acquisition of Aer Lingus months ago. But despite knowing the political landscape here - he was chief executive of Aer Lingus from 2001 to 2004 when it was still a semi-State company - he conceded that he has been taken aback by the response.

"I've been a bit surprised... Given the fact that it had been identified as a non-core asset that was to be sold, and the only question raised was about the timing and value, I've been a little bit surprised. But then, this is politics, so I suppose we shouldn't be surprised that politics comes into play."

Mr Walsh said he couldn't provide specific assurances on jobs at Aer Lingus. But he said: "We see a huge opportunity to feed traffic over Dublin from our customer base in the UK and with Aer Lingus as part of the OneWorld alliance, and more importantly as part of the joint business we have with American Airlines.

"Aer Lingus is a small airline, punching well above its weight, but you can imagine what would be possible for Aer Lingus to do with the support of American Airlines. That is something that Aer Lingus would dream about. Nobody else could do that."

Irish Independent

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Promoted Links

Also in Business