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IAG is a 'predator hovering over Aer Lingus'

The Transport Committee has been told that selling Aer Lingus share would ‘devastate’ Ireland’s economy and connectivity

Image: Sasko Lazarov/Photocall Ireland

THE OIREACHTAS TRANSPORT Committee has been told that selling Aer Lingus to IAG would have “a devastating effect” on the country’s economy and connectivity.

Several representatives from interest groups appeared before the committee this afternoon to discuss IAG’s €1.3 billion offer for the airline.

The board of Aer Lingus has said it is willing to recommend to shareholders that they accept the offer which values the company at €2.55 per share. The Government holds 25.11% of the airline’s shares and the latest offer would put the value of that stake at about €340 million.

Two bids of €2.30 and €2.40 per share from IAG were rejected by the board in recent weeks.

Today the committee was asked to advise the Government to veto the sale. Transport Minister Paschal Donohoe has said that the Dáil would have to vote on the buyout.

Evan Cullen, President of the Irish Airline Pilots Association (IALPA), said that the proposed takeover is “not good for our members or their families … or aviation in Ireland”.

However, he did concede that the part-privatisation of Aer Lingus in 2006 did provide a “cash buffer” that helped the airline through a “bad patch”.

IALPA represents about 500 Aer Lingus pilots and has a 7% stake in the company.

evan Evan Cullen Source:

Cullen told the committee it would be “very naive” to think that IAG, the parent company of British Airways, would not engage in “elimination of duplication”, namely firing Aer Lingus employees, particularly background and maintenance staff.

Matt Staunton, from Impact trade union, said that up to 1,200 of Aer Lingus’s 4,000-odd employees could lose their jobs. He said that at the end of September 2014, the airline had €973 million in gross cash, while passengers numbers had reached a record 11.1 million.

matt Matt Staunton Source:

“This is far from a deadbeat airline,” Staunton said, noting that IAG would likley cut back on Irish-London and Irish-US routes at the “first sign of trouble”.

We don’t need them

Cullen said the only way in which being bought by IAG might benefit Aer Lingus is the fact that it could buy planes at a cheaper cost because it would be part of a conglomerate. However, he said the airline has a purchasing union with Etihad that essentially works in the same way.

He added that IAG is interested in buying the Irish airline to get its hands on the 24 take-off and landing rights it has at London’s Heathrow Airport, worth an estimated  €400 million.

Aer Lingus does not need IAG, IAG needs Aer Lingus.

Some have suggested that the Government may agree to the sale if IAG makes promises in relation to maintaining certain routes.

However, this notion was largely dismissed at today’s meeting.

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Staunton said any promise given by a commercial company to the Government “means nothing” as they are primarily interested in profits and will act accordingly.

Senator Paschal Mooney said that relying on any such promise would be “naive”. He described IAG as a “predator hovering” over Aer Lingus.

Staunton said that people have to ”weigh up the windfall against what the likely loss is”, adding:  ”I’m saying that’s a no-brainer.”

Representative from chambers of commerce from Dublin, Shannon, Cork and Limerick said any loss of routes would have adverse affects on regional areas as well as foreign direct investment.

owen Owen Reidy Source:

Owen Reidy of Siptu said that the Government is a “unique shareholder” as it is not interested in the return it gets from Aer Lingus in the same way that other stakeholders such as Ryanair are.

“They’re in the driving seat and they should not drop the ball here.”

Any sale of government’s Aer Lingus shares would face Dáil vote

Poll: Would you support the sale of Aer Lingus?

About the author:

Órla Ryan

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