Statement on Aer Lingus to Seanad Éireann by Minister for Transport, Tourism and Sport, Paschal Donohoe TD

28th January, 2015

A lot has been said regarding potential takeover offers for Aer Lingus in the last couple of days. Indeed this has been a matter of some debate since it was first announced in December that International Airlines Group was considering making a takeover offer for Aer Lingus. Clearly the matter has moved on since then, but we are still in the early stages of any process.

 

Both companies have throughout made it clear that there is no certainty that any such offer will be made nor is it clear what the terms of any such offer might be.

 

Yesterday the Board of Aer Lingus announced that it has indicated to IAG that the financial terms of the latest proposal are at a level which it would be willing to recommend to shareholders, subject to being satisfied with the manner in which IAG proposes to address the interests of relevant parties.

 

At this point I want to again emphasise that any takeover offer will be given very careful examination before the Government takes any decision on the issue.

 

There are important considerations to be taken into account in addition to price. Among such issues would be the potential impact of any sale on:

 

–           connectivity to/from Ireland including direct transatlantic services and connectivity via Heathrow;

–           competition in the air transport market;

–           jobs in Irish aviation; and

–           the Aer Lingus brand.

 

A Steering Group chaired by my Department and comprising representatives from the Departments of Finance, Public Expenditure and Reform and NewERA, has been considering this matter since the first approach was made in December. The Steering Group is currently examining the issues around a potential offer for the State’s shareholding in the Aer Lingus. NewERA has procured external financial and legal advisers to help the Steering Group in its work.

 

They will report back to me shortly on these key issues and the matter will be considered further by the Government if necessary before any final decision is taken.

 

While no formal offer has been made, Aer Lingus is still in an ‘offer period’ under the Irish Takeover Panel Rules and therefore the rules regarding communications by all parties, including shareholders, in such a period apply.  Aer Lingus’ shares are still being trading on the Stock Exchange and care needs to be taken in what is said by me and my Government colleagues.

 

If a formal takeover offer is made for the company all relevant matters relating to that offer will be put into the public domain as part of that offer. However, at this stage there is very little new that I can say on the matter.

 

Yesterday I briefed my Cabinet colleagues on the approaches that have been made to the Board of Aer Lingus and issued a press statement afterwards.

 

Also yesterday, IAG said in a statement that it recognises the importance of direct air services and air route connectivity for investment and tourism in Ireland and intends to engage with the Government on these matters.

 

Representatives from the Steering Group are having a preliminary meeting with IAG today to begin that process.  However, if any confidential information is shared by IAG during these contacts, the Steering Group is legally obliged to keep such information confidential.

 

The State owns 25.1% of the issued share capital in Aer Lingus.  Ryanair owns 29.8%.  A statement issued by the Board of Aer Lingus earlier this week indicated that the revised proposal from IAG is conditional on, amongst other things, irrevocable commitments from Ryanair and the Government to accept the offer.

 

Such conditions may be waived by IAG at any stage, but such conditions are an indication that IAG, in advance of making any formal offer to Aer Lingus shareholders, is seeking the prior agreement of Government and Ryanair to accept such an offer.

 

The State’s 25.1% shareholding cannot be compulsorily acquired and therefore it is for Government to decide, having examined the matter carefully, whether to accept or reject any offer. At present, since no formal offer has been made, there is no deadline by which any such decision needs to be made.

 

Section 3(5) of the Aer Lingus Act 2004 also provides that the Minister for Finance, in whose name the State’s shareholding is held, may not dispose of any shares in Aer Lingus without the general principles of the disposal being laid before and approved by Dáil Éireann. Approval was given by the Dáil in 2006 for the general principles of the Aer Lingus Initial Public Offering.

However, those principles stated that the State would retain at least 25.1% of the shares. On this basis any decision to reduce the State’s current shareholding would need further Dáil approval.

 

Thank you very much.

 

Ends