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Dan White: Don't get sentimental, selling Aer Lingus will be good news for Dublin

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Aer Lingus planes on the tarmac

Aer Lingus planes on the tarmac

Aer Lingus planes on the tarmac

it's all over bar the shouting. Politici and and trade unions can huff and puff all they like but Willie Walsh will be back at the controls of Aer Lingus within a few weeks.

Walsh is chief executive of IAG, the parent company of BA and Spanish airline Iberia, who made a third offer for Aer Lingus over the weekend.

It is now offering €2.50 a share for the Irish flag carrier, which values Aer Lingus at €1.33bn.

A sale of Aer Lingus at this price would deliver a tidy windfall to both of the airline's major shareholders, with Ryanair's 29.9pc stake fetching €399m and the government's 25pc shareholding going for €334m.

The writing has been on the wall for Aer Lingus since December 14 when IAG made an initial offer of €2.30 a share for the company. This was rejected by the Aer Lingus board.

With IAG having since raised its offer not once but twice, the Aer Lingus board has had no option but to take the takeover approach seriously.

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Ever since its formation 79 years ago Aer Lingus has been a national icon. That has been something of a mixed blessing for the airline.

For the first 70 years of its existence it was a semi-state and the airline's operations were frequently influenced more by political rather than commercial considerations.

That was all supposed to change in 2006 when Aer Lingus was privatised and its shares floated on the Irish Stock Exchange.

Unfortunately the government botched the privatisation. Aer Lingus was barely a wet day on the Stock Exchange when its great rival Ryanair pounced and bid not once but twice for the company.

A legacy of these two failed bids is Ryanair's 29.9pc stake, making it Aer Lingus' largest shareholder. Meanwhile, the state retained a 25pc shareholding. The result has been deadlock at Aer Lingus for the past eight-and-a-half years.

Carrying just 11m passengers a year, Aer Lingus is very much a minnow in a rapidly-consolidating European aviation market.

In recent years a "big five" has emerged. This consists of Ryanair, which will carry almost 90 million passengers this year, followed by IAG, Air France/KLM and Lufthansa each on about 70 million passengers and EasyJet on almost 60 million passengers.

The notion that Aer Lingus could continue to stand alone in such company has always struck me as fanciful.

The rapidly-changing European aviation market hasn't spared the likely takeover of Aer Lingus from an outpouring of sentimental nonsense.

Every time the future ownership of the airline comes up for debate we can be guaranteed to hear about Aer Lingus' Heathrow 'slots'. This completely ignores the fact that the vast majority of the people who fly to Heathrow with Aer Lingus don't transit to another destination and could just as easily fly into one of the other London airports.

Take it from me, as a national virility symbol the Heathrow slots are much overrated!

But what about Cork and Shannon Airports, I hear you say. What indeed. For far too long the commercial activities of Aer Lingus have been hobbled to support the provincial airports.

While this might have been just about acceptable when Aer Lingus was a state-owned airline operating in a fragmented European aviation market, it makes no sense now that Aer Lingus is in the private sector. It's long past time that the provincial airports learned to stand on their own two feet.

TRAFFIC

Meanwhile, an Aer Lingus takeover is almost certainly good news for Dublin Airport with IAG likely to route some of its existing Heathrow transit traffic through Dublin instead.

With Heathrow space at premium it almost certainly makes more sense for IAG to use Dublin for lower-yielding transit traffic.

The likely IAG takeover represents a dramatic return to Aer Lingus for Willie Walsh who quit in 2005 as boss of the Irish airline when the government of day rejected his management buyout.

Who says revenge isn't a dish best served cold?


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