Ireland seeks further commitments over Aer Lingus

24th February 2015, Comments 0 comments

The Irish government said Tuesday it would not sell its stake in airline Aer Lingus to British Airways owner IAG without additional commitments.

IAG's 1.35 billion euros ($1.5 billion) bid for Aer Lingus needs the support of Dublin, which maintains a 25.1 percent stake in the former national carrier.

Transport minister Paschal Donohoe said further clarity was needed on the implications for employment and connectivity from Irish airports.

A five-year pledge not to dispose of the airline's lucrative landing slots at London's Heathrow airport is not considered long enough, Donohoe added.

In a statement, he said the existing proposals do "not at present provide a basis on which the government could give an irrevocable commitment to accept an offer to dispose of its shares".

Last month, the board of Aer Lingus said it was "willing to recommend" a takeover approach worth 2.55 euros per share -- subject to certain conditions.

IAG has made a number of "legally-binding" commitments on the future of the airline, promising to maintain the brand and a head-office based in Dublin as well as ensuring the airline's Heathrow slots would not be sold.

But the potential sale has become a hot topic for Dublin, with severe opposition within the junior government coalition party, Labour.

The announcement will come as a blow to IAG chief executive Willie Walsh who on Monday met with Aer Lingus unions and earlier this month appeared before a parliamentary committee to answer questions on the proposals.

IAG said it would "consider" Donohoe's statement in "due course."

Earlier Tuesday, Aer Lingus reported a net loss in 2014 of 95.8 million euros due to a one-off payment to resolve a legacy pension dispute.

Operating profit before exceptional items meanwhile jumped 17.8 percent to 72 million euros.

Revenue rallied 9.2 percent to 1.56 billion euros and passenger numbers rose 1.5 percent to 9.76 million, the Dublin-based carrier added.

In the results statement, the carrier's chairman Colm Barrington reiterated the board's support for the IAG offer.

"To enhance these excellent results and to accelerate Aer Lingus' growth, it is the board's strong belief that the company should now take the opportunity to combine with IAG," Barrington said.

"These significantly positive benefits will de-risk Aer Lingus' future, strengthen its operations and enhance the future success of the company," he added.

Tuesday's results statement was published one week after Aer Lingus appointed chief strategy and planning officer Stephen Kavanagh as successor to chief executive Christoph Mueller.

Mueller steps down on February 28 and Kavanagh -- who has 26 years' service with the airline -- will pick up the reins from March 1.

© 2015 AFP

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