Sunday 20 October 2019

Government more likely now to sell Aer Lingus

Big shift as Labour seeks 'independent valuation' of airline's Heathrow slots

Willie Walsh
Willie Walsh

Daniel McConnell

A commitment from IAG to retain Heathrow slots for "seven or eight" years may be enough to secure Government support for a sale of Aer Lingus, the Sunday Independent has learned.

There has been "significant shift" in feeling within Government in the past two weeks, with Finance Minister Michael Noonan among those believed to be supportive of selling the former national airline.

Today the Labour Party conference will debate a motion calling for an "independent valuation" of the assets of the company.

This weekend, Transport Minister Paschal Donohoe is also known to be "very open" to an improved offer.

"The mood has certainly changed in the past two weeks. The Oireachtas hearings have had an impact. Hearing voices like economists Colm McCarthy and John Fitzgerald has had an impact," said one Fine Gael minister.

While it has been speculated that the Government wanted a 10-year guarantee on slots in and out of Heathrow, Government sources have indicated that a guarantee of "seven or eight" years might suffice.

"There is not enough support for a sale yet, but there has certainly been a sizeable shift in opinion toward considering a sell-off," the minister added.

Another senior source said: "Ten years ago this process would have exclusively been ruled by the heart.

"This time there is more hard-headed scrutiny of what is at stake."

Sources close to the process said the "ball is very much back in IAG's court and it all depends on what new offer comes in".

IAG's €1.4bn bid received a fillip yesterday when an emergency motion on the issue introduced at the Labour Party conference did not implicitly rule out the sale of Aer Lingus to IAG.

The motion which will be taken later today, called for an independent valuation of the 23 Heathrow slots, but stopped short of ruling out a sale under any circumstances. The motion notes "serious concern that the present bid fails to reflect the true value of Aer Lingus".

The Sunday Independent has learned that Mr Donohoe has gone to great lengths to keep members of both Fine Gael and Labour informed about the process and to address their concerns about the impact of any potential sale on workers.

Last Tuesday, ahead of the meeting of the Cabinet, Mr Donohoe held a one-on-one meeting with Mr Noonan about the Aer Lingus sale before holding a separate face-to-face briefing with Tanaiste Joan Burton.

Mr Donohoe is known to have held a meeting with all of his Fine Gael ministerial colleagues before the Cabinet meeting in order to lay out his thinking on the contentious issue.

Mr Donohoe went to Cabinet with a firm proposal to reject the IAG offer as it was, but he has been keen to make it known that he remains willing to engage with IAG chief executive Willie Walsh.

It is known there was an intense discussion at Cabinet last Tuesday before the Government decision to reject the IAG offer was reached.

"Donohoe has had an awful lot, an awful lot, of contact with backbenchers from both parties in the past two weeks," said one senior source.

Announcing IAG's results on Friday, Mr Walsh said he had not given up on an Aer Lingus bid, and that he was to again meet with Mr Donohoe's representatives as well as trade unions in the coming weeks.

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"We will sit down with the expert panel and respond," Mr Walsh said. "I will not engage in negotiating through the media," he added.

Market analysts have concentrated on the 10-year slot request from the Government, which they have concluded IAG would find hard to justify commercially.

It has also been suggested that Knock, Shannon and Cork airports could benefit from reduced landing charges as a means of bridging the gap.

It is also likely that IAG could offer greater clarity on Aer Lingus' jobs and the potential for growth on transatlantic routes.

Mr Walsh is due to meet unions next Friday in what is seen as a key engagement.

While the Labour Party has, up to this juncture, refused to countenance a sell-off this side of a general election, the intensive public relations campaign undertaken by Mr Walsh has had an impact.

Sunday Independent

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