TDs to get vote on Aer Lingus bid if Cabinet approves sale

Following Cabinet discussions on the potential sale of Aer Lingus Transport Minister Paschal Donohoe has said the Government would seek answers from IAG over the future of Aer Lingus in coming days.

TDs to get vote on Aer Lingus bid if Cabinet approves sale

Following Cabinet discussions on the potential sale of Aer Lingus Transport Minister Paschal Donohoe has said the Government would seek answers from IAG over the future of Aer Lingus in coming days.

The Department of Transport has also confirmed TDs will be asked to vote on the sale if it is agreed at Cabinet and in the board rooms.

“At this point I want to again emphasise that proposals which involve the potential sale of the State’s Aer Lingus shares will be given very careful examination before the Government takes any decision on the issue,” he said.

“There are important considerations to be taken into account in addition to price and I have referred before to competition, connectivity and jobs as among those criteria. We will engage with IAG on these issues in the coming days.”

Officials from Mr Donohoe’s department, civil servants from other wings of government and external advisers are examining the IAG offer and will report back shortly before a decision is made, he said.

A number of backbenchers have already broken ranks and backed calls from the opposition and left wing members to stop the deal going through or at least seek assurances over jobs and transatlantic and Healthrow routes.

The trade union Siptu, which represents more than 50% of the workers at the airline, called for the sale to be blocked unless they get guarantees.

Siptu utilities and construction division organiser Owen Reidy said: “We believe the Government must act with extreme caution on this critical matter. The long term interests of the country, the economy and the workforce at Aer Lingus must all be considered.

“Unless the Government is given clear and tangible guarantees on a number of key issues, the IAG offer must be rejected.”

The Irish Government holds a 25% stake in Aer Lingus and will want reassurances from the BA owner over its plans for the key Dublin to Heathrow route.

The Tánaiste warned at the weekend that protecting Ireland’s air links with Europe and the US was vitally important in terms of inward investment, exports, business and tourism.

Tánaiste 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.”

It is thought that Ryanair, which owns just under 30% of Aer Lingus following a series of failed takeover attempts, may be tempted to sell at the new offer price of €2.55 a share, which is equivalent to €1.36bn.

The Aer Lingus board has previously rejected proposals from IAG worth €2.30 and €2.40 a share.

Currently, 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.

IAG’s interest in Aer Lingus stems from its desire for additional Heathrow runway slots as well as the opportunity to deliver more industry cost efficiencies.

Aer Lingus is the fourth busiest operator at London’s Heathrow behind British Airways, Lufthansa and Virgin Atlantic.

Robin Byde, a transport research 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 United States.

He added: ”The other main attraction is Aer Lingus’s 23 slot pairs at Heathrow, which we calculate are valued at about €10m per pair.”

However, Mr Byde said he was wary about the politics of the deal and the potential for IAG to get ”dragged into prolonged and distracting negotiations”.

Paschal Donohoe's statement in full:

"This morning I briefed my Cabinet colleagues on the approaches that have been made to the Board of Aer Lingus by International Airlines Group (IAG) – each of which is in the public domain.

"The Government notes the statement by the Board of Aer Lingus this morning 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, subject to being satisfied with the manner in which IAG proposes to address the interests of relevant parties.

"The process involving a potential sale of Aer Lingus to IAG is in the early stages. It is important to note that IAG has made a proposal to make an offer and that no formal offer has yet been made.

"At this point I want to again emphasise that proposals which involve the potential sale of the State’s Aer Lingus shares 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 and I have referred before to competition, connectivity and jobs as among those criteria. We will engage with IAG on these issues in the coming days.

"A Group chaired by my Department and comprising representatives from the Departments of Finance, Public Expenditure and Reform and NewERA, and supported by external advisers, is currently examining the issues around a potential offer for the State’s shareholding in the company.

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

"Aer Lingus is in an ‘offer period’ under Irish Takeover Rules and therefore the rules regarding communications by all parties (including shareholders) in such a period apply. Therefore, there are restrictions on what I or my Government colleagues can say at this point."

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