Is IAG’s seduction of Aer Lingus working?

International Airlines Group’s (IAG) (British Airways, Iberia and Vueling Airlines) (London) continued seduction of Irish flag carrier Aer Lingus (Dublin) seems to be finally working, as the airline is revealing the positives of a takeover by the owner of British and Spanish flag carriers British Airways (London-Heathrow) and Iberia (Madrid).

In a statement to The Guardian, Christoph Mueller, the clover-tailed carrier’s outgoing CEO says that Ireland’s entire economy will benefit if the International Airlines Group takes over Aer Lingus.

Mueller, who steps down as CEO of the airline this week, said IAG’s £1.02 billion (€1.4 billion) ($1.57 billion) offer to buy Aer Lingus would be the biggest single foreign investment in the Republic since the financial crash.

He continued that there was “a great deal of excitement” that Aer Lingus would be able to create jobs on a much larger scale if IAG took charge of the former state-run airline.

Mueller also stressed that talks between IAG and the Aer Lingus trade unions had been “very constructive”.

Aer Lingus announced on Tuesday that its profits had risen by almost 18% to €72 million ($81.6 million) from the previous year. Total revenue was up by 9.2%. For the first time in the airline’s history the number of passengers has exceeded 11 million.

On the hike in profits and the IAG take-over proposal, Mueller added: We profitably expanded our long-haul network utilizing our cost advantage and favorable geographic position and helped establish Dublin as the 7th largest European hub for transatlantic connections.

“Our short-haul business continued to demonstrate its resilience despite a highly competitive market. Commercial initiatives, in addition to cost control, led to the highest operating profit since the financial crisis and 17.8% above last year.”

Read more from The Guardian: CLICK HERE

Assistant Editor Oliver Wilcock reporting from Manchester.

Update: The Irish government late on February 24 stated it cannot accept the current offer from IAG for Aer Lingus. The government according to the BBC has raised concerns and wants more information before selling its share. Red the full report: CLICK HERE

Copyright Photo: SM Fitzwilliams Collection/AirlinersGallery.com. A takeover by IAG would lead to an updated fleet. Aircraft like this wet leased Air Contractors Boeing 757-2Q8 EI-LBR (msn 28167) would be phased out.

Aer Lingus aircraft slide show: AG Airline Slide Show

AG No Ads-Beautiful

2 thoughts on “Is IAG’s seduction of Aer Lingus working?

  1. Paddy Kilduff

    Hi Bruce, Your item below has been overtaken by events this evening’s statement from the Irish Government:

    “Tuesday 24 February 2015 Having briefed his Cabinet colleagues on the latest position in relation to the IAG proposal to make an offer for Aer Lingus, the Minister for Transport, Tourism and Sport, Paschal Donohoe TD, has this afternoon (Tuesday) reiterated the Government’s underlying position in relation to its shareholding in Aer Lingus.  The minority holding which the State has in Aer Lingus would not be sold unless the market conditions were favourable, the terms of the sale were satisfactory to the Government and an acceptable price could be secured. The Government has acknowledged the strategic importance of aviation to Ireland as an island nation where over 80% of passenger movements into and out of Ireland are by air. Ireland’s aviation policy has, for decades, favoured competition by seeking to have at least two major airlines with significant home bases competing in the Irish market.  Aer Lingus plays a key role with almost 45% of airline seats at Dublin, Cork and Shannon airports on Aer Lingus flights.  The company also supports significant numbers of jobs and is in the top 50 of Irish employers. In considering the IAG proposal, the Government has also taken into account the fact that three takeover bids have been made for Aer Lingus since 2006. Successive Governments have opposed these bids primarily on competition grounds. The Government has today confirmed that it will continue to pursue a policy based on competition between at least two airlines with significant home bases in the Irish market. The Government also considers an open and competitive aviation sector to be the best mechanism to meet the challenges inherent in the aviation industry and strongly supports the maintenance of an open aviation market. The Government has acknowledged the detail and clarifications which both IAG and Aer Lingus have offered since IAG announced its initial proposal to acquire Aer Lingus. The Government has in particular noted IAG’s belief that it can bring strength and support to Aer Lingus that IAG believe it cannot have as a stand-alone airline, that it can facilitate the expansion of the network and is committed to maintaining the Aer Lingus brand and head office in Dublin. Last Friday, IAG also provided additional important information outlining at this stage of their engagement with Aer Lingus the IAG vision for the future development of Aer Lingus under their ownership. This included additional investment in aircraft, new routes, and job creation potential for Aer Lingus and the economy as a whole. The Aer Lingus Board has expressed the view that a combination of Aer Lingus with IAG has a compelling strategic rationale and will deliver significant benefits to Aer Lingus, to Aer Lingus’ employees, to Aer Lingus’ customers and to Ireland.  They have also indicated that they see this proposal being about accelerated growth, real prospects for long term economic growth, growth in global connectivity, growth in international trade, and growth in tourism and employment. IAG has also indicated recently that it is willing to offer a commitment not to dispose of Aer Lingus’ existing Heathrow slots, including to any other company in the IAG Group, without Government approval.  There is no time limit on this commitment.  In addition, IAG has stated that it will offer a commitment to continue operating Aer Lingus’ existing slots at Heathrow for routes to Ireland and, within that, that they would commit to operating services from Shannon and Cork on the same basis as operated today (four daily services from Cork and three from Shannon) for a period of five years. The Government position is that further consideration of the IAG proposals will be based on the following:- Both IAG and Aer Lingus have made positive statements about overall employment prospects at Aer Lingus as a result of Aer Lingus being part of IAG, including some encouraging information in respect of the number of new jobs for pilots, engineers and ground staff. However, IAG has indicated that there would be rationalisation as a result of Aer Lingus being part of IAG. Clarity on the overall employment prospects on the basis of the proposals received is still needed, with particular reference to the timeframe within which net additional employment would be created.- Aer Lingus sees the potential for its planned growth in transatlantic traffic to be significantly accelerated and for new US destinations to be added to its network. In addition, IAG has indicated that it would look at other opportunities to grow at Cork and Shannon and that, through the re­lationship with British Airways at Gatwick, it can enhance the Knock-Gatwick service.  The Government needs firm commitments and details on these matters.- IAG has indicated that it is proposing to offer legally binding, permanent commitments on the Heathrow slots and term-based commitments on routes. However, the commitment in relation to routes is for five years. The Government requires a longer period.- The nature and acceptability of oversight measures on the Heathrow slots and routes needs to be confirmed.  These would also be subject to any EU considerations.- IAG’s most recent proposal values each Aer Lingus share at €2.55 comprising an all cash offer for the Company of €2.50 per share and a cash dividend of €0.05 per share. The Government has noted the Aer Lingus Board’s indication that, subject to being satisfied with the manner in which IAG proposes to address the interests of relevant parties, this is at a level at which it would be willing to recommend  the financial terms. This is being evaluated by the Steering Group and its advisors. As set out above, the information and commitments that have been provided to date 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, should one be made by IAG. In line with stated policy, the Government remains open to considering any improved proposal which IAG may bring to the Steering Group. Endshttp://www.dttas.ie/press-releases/2015/statement-minister-donohoe-government’s-position-iag’s-proposal-make-offer-aer   Rgds

    Paddy

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