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Saturday 24 February 2018

Q & A: What has IAG promised?

John Mulligan

John Mulligan

It has pledged to keep the Aer Lingus brand and headquarters in Ireland; use Heathrow slots for Irish routes for five years; and agreed that the slots couldn't be sold in the future without the Government's say-so.

And what about jobs?

No mention of jobs in the IAG statement to the stock exchange yesterday. That leaves it wide open to allegations that it could cut them when it buys Aer Lingus. Trade unions jumped on that omission of jobs in the statement yesterday. But analysts say IAG is buying Aer Lingus to grow it, not shrink it.

What did the Government say?

Not much. Government advisers will meet IAG advisers this week. There are bound to be lots of unanswered questions despite the lengths IAG has already gone to, to try and allay fears.

Dublin already has significant international connectivity, but what about services to Heathrow from Cork and Shannon?

There has been a lot of concern that IAG would cull services from Cork and Shannon to Heathrow, but it's understood to have given the Government assurances that those services will continue.

Yes, but for how long?

IAG says that it will undertake to use the existing slots Aer Lingus has at Heathrow exclusively on Irish routes for the next five years. Realistically, it's about as long as it can give a guarantee for. What happens after that would be up to market economics. If routes are profitable, they'd have a good chance to being kept. If they're not - as is the case now - they could be axed.

What's the next step?

IAG and Government advisers will meet this week. Expect further engagements. It could take three weeks before the Government is in a position to accurately assess the takeover approach.

And then?

If the Government doesn't say no to a deal after assessing the information it's been given, but doesn't come right out and say yes either, IAG may proceed with a formal bid for Aer Lingus.

And then the Government would sell?

Probably not. A bid will mean the whole playing pitch gets shifted to Brussels. Competition mandarins there will probe the whole deal to see if they're willing to let a takeover go ahead. The Government might wait until that decision before it makes up its own mind. But for Brussels to deliver its ruling could take up to 10 weeks.

After that?

Well, if the Government says yes, a sale can get under way, but all hell would probably break loose at home. A huge amount of opposition will remain to a deal being done.

What if the Government says no?

Well, that is a real conundrum for IAG. If the Government says no, IAG could just walk away. It might figure that going against the Government interest just isn't worth the hassle.

But it could also decide to stuff the Government and just try to buy the 74.9pc of Aer Lingus that the State doesn't own. That would be a hostile move, though, and really put IAG in the bad books - and not only in political and trade union circles. The public mightn't like it, either. There's conflicting thoughts about whether IAG would go down this route.

But with a 25.1pc stake, the Government could still have a big say in how Aer Lingus is run, even if IAG owned the rest of it, couldn't it?

No. They would have very little meaningful input into how Aer Lingus would be run in such circumstances.

Irish Independent

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