Aer Lingus (EI, Dublin International) shareholder, the Irish government, could commit to a deal with the International Airlines Group (IAG) should the IAG commit to retaining Aer Lingus's London Heathrow slots for 'seven or eight years'.
Last week, the government said it would not commit to the sale of its 25.11% stake in the airline unless "market conditions were favourable, the terms of the sale were satisfactory to the Government and an acceptable price could be secured."
Among the additional guarantees required by Dublin is a longer term commitment from the IAG to retain Aer Lingus's twenty-three Heathrow slots for use in serving Belfast City, Dublin International, Shannon and Cork. Though the IAG had originally offered legally binding, permanent commitments of five years, it is speculated that the Government wanted a 10-year guarantee. But, according to the Irish Independent, government sources have indicated that a guarantee of "seven or eight" years might now suffice.
However, with parliamentary elections just a year away, the deal has become an emotive, political hot potato with both sides of the Oireachtas keen to protect their voters' interests. Later this week, the Irish Labour Party is expected to call for an independent evaluation of the slot pairs which accountancy firm Deloitte has valued at between EUR770 million (USD870.1 million) and EUR925 million (USD1.045 billion) - more than half the EUR1.36 billion (USD1.54 billion) price that the IAG has offered for Aer Lingus.
Despite the added concessions, Irish Transport Minister Paschal Donohoe says the Irish government's stance towards the IAG's revised bid of EUR2.55 (USD2.907) per share in Aer Lingus has softened following broad-ranging consultative talks with industry experts and analysts in the last several weeks. Among the sale's key unofficial backers is now said to be Irish Finance minister, Michael Noonan.
In the wake of two rebuffed proposals from the IAG, Aer Lingus' management has come out in support of this, its third, stating it to be 'in the best interests of Aer Lingus’ shareholders.'
IAG supremo Willie Walsh and Aer Lingus chief executive Stephen Kavanagh are due to meet Aer Lingus unions this week where they are expected to delve into further depth concerning the IAG’s plans for the Irish airline should the deal proceed.
During the unveiling of the Group's full-year pre-tax profits of EUR828 million (USD927 million) last week Walsh, himself a former CEO at Aer Lingus, said the IAG could abandon its bid should it no longer "make sense."
