Aer Lingus ‘willing’ to accept IAG’s 1.36bn euro offerPosted: January 27, 2015
Irish airline Aer Lingus has said it is willing to accept a €1.36bn (£1bn) takeover offer from British Airways owner IAG.
But Aer Lingus said before it formally recommends the offer, IAG must “address the interests of relevant parties”.
That is thought to mean its two biggest shareholders – the Irish government and Ryanair – and the unions.
The Irish cabinet is due to hold its weekly meeting on Tuesday, where the IAG offer is expected to be discussed.
The government owns 25.1% of the airline, and Ryanair has a 29.8% stake.
In a statement, Aer Lingus said: “The board has indicated to IAG that the financial terms are at a level at which it would be willing to recommend [the offer] subject to being satisfied with the manner in which IAG proposes to address the interests of relevant parties”.
Aer Lingus also stressed that IAG plans to operate Aer Lingus as a separate business, with its own brand, management and operations, should the takeover go ahead.
The trade union representing most Aer Lingus staff, Impact, has said that a takeover could lead to the loss of up to 1,200 jobs – a quarter of the workforce.
IAG’s primary interest in the Irish carrier is its 23 pairs of take-off and landing slots at Heathrow airport – valued at about £30m apiece – allowing it to operate more flights.
Ireland’s deputy prime minister warned at the weekend that protecting the country’s air links with Europe and the US was vitally important in terms of inward investment, exports, business and tourism.
Joan Burton told RTE Radio: “What we will want to do as a government, and what’s absolutely important, is to protect these slots and the connections of direct flights in and out of Ireland.”
Aer Lingus directly employs 3,900 people, mostly in Dublin, with 2,100 of these described as ground staff in areas such as clerical, operative and back office roles.
A takeover may also face competition concerns from European regulators. If IAG, which owns Spanish carrier Iberia, was forced to sell some Heathrow landing slots owned by Aer Lingus it could undermine the rationale for the deal.
Aer Lingus is the fourth-largest operator at Heathrow after BA, Lufthansa and Virgin Atlantic.
To gain political support, IAG knows it has to make the case that Aer Lingus within IAG is stronger than Aer Lingus on its own”
In a separate statement, IAG said that Aer Lingus had now allowed it access to its financial books to “perform a limited period of confirmatory due diligence”.
IAG’s offer is worth €2.55 a share. Aer Lingus had rejected two previous IAG offers – pitched at €2.30 and €2.40 a share.
Ryanair built its stake in Aer Lingus as part of three failed attempts to buy the carrier. Competition regulators blocked the takeover bids and told Ryanair it must sell all but 5% of its shareholding. However, an immediate sale was delayed by a lengthy appeals process.
Robin Byde, a transport analyst at Cantor Fitzgerald stockbrokers, said IAG was seeking to build on Aer Lingus’s lucrative niche on transatlantic routes, which offers customs and immigration clearance in Dublin and Shannon for flights to the US.
But he was wary about the politics of the deal and the potential for IAG to get “dragged into prolonged and distracting negotiations”.
Sourced from BBC News