IAG expected to improve Aer Lingus offer

IAG expected to improve Aer Lingus offerThe City’s leading aviation analyst believes International Airlines Group will return with an improved takeover offer for Aer Lingus.

Nearly three weeks after news broke of a reputed €1.15 billion offer from the British Airways owner, neither side – nor Aer Lingus shareholders Ryanair and the Irish government – has broken cover on whether a deal will get off the ground.

However, Andrew Lobbenberg, the veteran HSBC airlines-watcher, believes that a deal makes sense and, while complicated, is achievable, the Times reported.

“We see the logic of a combination between IAG and Aer Lingus,” he said in a research note.

The IAG approach has posed a problem for Aer Lingus, which comes with the baggage of a less-than-straightforward share register, in which t

The Irish government holds a 25% stake from state ownership days and Ryanair holds 29% of Aer Lingus.

Lobbenberg said that any deal could pass only if Dublin was happy with future employment and competition issues.

As for the Ryanair stake, he conceded that a deal would, unusually, also have to have the say-so of a largest shareholder, which effectively would be the biggest competitor of a combined IAG and Aer Lingus.

However, Lobbenberg added: “We would not see this as a challenge. IAG evidently is interested in buying and we think Ryanair is ready to monetise its Aer Lingus holding.”

Lobbenberg puts a €1.5 billion value on Aer Lingus and believes that IAG would have little trouble funding a deal, since it has €4.9 billion in cash and deposits on its balance sheet.

It is widely believed that the board of Aer Lingus is ready to speak to IAG at the right price.

Sourced from Travel Weekly

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