Ireland sells Aer Lingus stake for over a billion

After months of detailed talks, the Irish government has accepted a takeover bid from IAG for national airline Aer Lingus

The Irish government has finally accepted an offer from International Airlines Group for its stake in Aer Lingus. Ryanair - which owns a substantial stake in the airline - has yet to comment on the deal

The Irish government has agreed to sell its 25.1 percent stake in the national carrier, Aer Lingus, to International Airlines Group (IAG) for €1.36bn. The decision was announced on May 27 by the cabinet after several months of negotiations and a valuation of the Dublin-headquartered airline at €2.55 per share.

Ryanair, which owns a 29.8 percent stake in Aer Lingus, is yet to announce whether it supports the deal – although, based on previous rhetoric, there is room for optimism. According to a company statement made on May 27 by the low-cost airline: “The board of Ryanair has yet to receive any offer, and will consider any offer on its merits, if and when an offer is made.”

Concerns regarding job losses have also been quashed by assurances from IAG

In 2014, Aer Lingus rejected two bids by IAG on the basis of the amount offered, together with several concerns it had regarding the consequences of a takeover. In order to secure the deal this time around, the British-Spanish multinational airline has guaranteed to maintain flight routes from Dublin, Cork and Shannon into London Heathrow – on the condition that airport charges do not rise beyond a pre-agreed amount. Routes from Belfast have only been guaranteed for five years.

“Having carefully considered all elements of the offer, the Government considers that a sale of the State’s minority shareholding to IAG, on the basis of the terms offered, would be the best means of securing and enhancing Ireland’s connectivity with the rest of the world and maintaining a vibrant and competitive air transport industry in Ireland”, said a press release published by the Department of Transport, Tourism and Sport. “It would also best serve the interests of the travelling public, Aer Lingus and its employees, the Irish tourism industry and the Irish economy as a whole”.

Concerns regarding job losses have also been quashed by assurances from IAG, which has pledged 150 new jobs will be created at Aer Lingus by the end of 2016, with the figure potentially rising to 635 by 2020 should the airline group continue expanding.

The Irish airline will continue operating its international services under the Aer Lingus brand and will also preserve its head office and registered name in the country.

It is estimated the merger will increase IAG’s current capacity levels by 2.4 million passengers by 2020, while also expanding its transatlantic flights with the addition of four new destinations to North America.

The decision will be debated in Dáil, Ireland’s parliament, on May 27. If approval is granted, IAG’s offer can be formally made.