Aer Lingus and IAG: Sunday Business Post

1st March, 2015

This week, I restated the Government’s position in respect of our minority shareholding in Aer Lingus, saying that the State’s stake in the airline will not be sold unless market conditions are favourable, the terms of the sale are satisfactory to the Government and an acceptable price can be secured. That remains the case. In doing so, I outlined the Government’s unwillingness to accept an offer, if one was made, to dispose of the State’s 25.1% shareholding in Aer Lingus, based on a proposal that is currently on the table from International Airlines Group (IAG).


The proposal by IAG to make an offer to buy Aer Lingus has been the subject of much media attention since late last year when details first emerged. Much coverage has been given to the issue as commentators, aviation experts, politicians and the general public weigh up the pros and cons of a sale taking place. Or not.


That level of public interest is understandable. As an island nation, where over 80% of passenger movements into and out of our country are by air, aviation is more important to us than most. Aer Lingus, which is still often viewed by some as the national airline, despite the fact that the State retains just a quarter of the shareholding, is central to that, accounting, as it does, for 45% of airline seats from Dublin, Cork and Shannon and supporting significant numbers of jobs as one of the top 50 Irish employers.


In considering the proposal by IAG to buy the State’s share in Aer Lingus, a number of considerations have been key. One is access into and out of Ireland and a second is jobs, both within the airline and further afield. The brand identity of Aer Lingus and the share price on offer are also vital.


I have acknowledged the detail and clarifications that IAG have given on these points to date. For example, commitments have been offered in respect of the disposal of Aer Lingus’ existing slots at Heathrow, including continuing to operate those slots for routes to Ireland and the maintenance of four daily services from Cork and three from Shannon for a period of five years. The Aer Lingus brand and head office in Dublin are also to be maintained.


While encouraging information has been given in respect Aer Lingus’ future employment potential, including the number of new jobs for pilots, engineers and ground staff, more clarity is needed.


In terms of the potential for growth in transatlantic traffic, and the addition of new US destinations for Aer Lingus, the Government requires further detail on what is envisaged. This too applies to plans for growth at Cork and Shannon and for the enhancement of the Knock-Gatwick service.


While proposals in respect of legally binding, permanent commitments on the Heathrow slots and term-based commitments on routes are welcome, we need to be confident of their nature and acceptability, including EU considerations. It is the Government’s view that a longer timeframe than the five year commitment given is needed. Five years is not enough.


This Government’s number one priority since coming to Office has been job creation and getting our country back on track. We are now seeing tens of thousands of jobs being created, with sectors such a tourism acting as a driving force in delivering our economic recovery. We will do everything to further support this recovery and this is why the right decision is needed on this crucial matter.


While, so far, the commitments provided do not provide a basis upon which the Government could give an irrevocable commitment to accept an offer to dispose of our shares, should one be made by IAG, as stated earlier in the week, the door to IAG remains open and the Government remains open to considering any improved proposal which IAG may bring.

In that event, the Government’s Inter-Departmental Steering Group, which includes representatives from the Departments of Transport, Tourism and Sport; Finance; Public Expenditure; and NewERA, as well as financial and legal experts, will carefully analyse any new proposals that may emerge.