Etihad makes move on Aer Lingus with 11m shares swoop

Cormac Murphy

ONE of the biggest airlines in the Middle East has acquired almost 3pc of Aer Lingus, it was revealed today.

Etihad Airways, the national airline of the United Arab Emirates (UAE), has bought up 2.987pc of the airline over the last couple of months.

Aer Lingus confirmed it is in talks with Etihad about possible co-operation agreements and joint procurement deals.

It comes after revelations last year that the Abu Dhabi-based carrier was interested in acquiring the State's 25pc stake in Aer Lingus.

Etihad had approached the Government about the move, according to reports at the time.

Transport Minister Leo Varadkar had insisted he would not sell the stake for less than €1 per share, valuing it at €132.4m and the airline at €529.6m.

Etihad, which was set up in 2003, has close ties with Manchester City -- the airline's chairman Sheikh Hamed bin Zayed Al Nahyan is a half-brother of the football club's owner Sheikh Mansour.

Etihad is not expected to increase its shareholding in Aer Lingus until the outcome of its discussions. It has been able to acquire the shares quietly as, under stock market rules, it does not have to disclose the share-buying until it passes 3pc.

The company has now signalled its intent to become a strategic investor in Aer Lingus. Etihad has made no secret of its desire to become a big player in the European market, having already acquired a 29.2pc stake in Air Berlin.

If the Middle East company bought the Government's 25pc Aer Lingus stake, clauses may be introduced to ensure the retention of Aer Lingus' valuable Heathrow slots in London for access to Irish airports.

The slots are considered a primary asset of the airline.

Etihad has used Bank of America and Merrill Lynch to buy about 11 million Aer Lingus shares on its behalf, reports today revealed.

Destroyed

Etihad began flying from Dublin to Abu Dhabi in 2007. It also has a line maintenance operation in Dublin.

Discussing a possible sale of Aer Lingus, Mr Varadkar said last year: "What I can say is that the Aer Lingus stake was held for strategic reasons and having studied the matter over the summer, I don't think that really stands anymore."

Ryanair, another major shareholder in Aer Lingus, said previously: "Ryanair would welcome another financially strong airline/investor acquiring the Government's 25pc stake, which could then work with Ryanair and other like-minded shareholders to restore shareholder value, which has been destroyed over the past five years by the board and management of Aer Lingus."

comurphy@herald.ie