International Consolidated Airlines (IAG) Group is set to buy the Irish government’s 25 per cent stake in Aer Lingus, paving the way for it to acquire the carrier for 1.4 billion euros ($1.5 billion).
As part of the agreement, IAG must safeguard Aer Lingus’ connections from Heathrow Airport to Dublin Airport, Cork Airport and Shannon Airport for seven years.
Under the deal, Aer Lingus shareholders would receive 2.55 euros per share. It still needs to be approved by Ireland’s parliament, the Dail Eireann, under the Aer Lingus Act 2004.
IAG chief executive officer, Willie Walsh says: “Ireland’s vital air links to Europe and North America would be enhanced, creating new jobs, with cast-iron guarantees on ownership of Aer Lingus’ Heathrow slots and their use on flights to Dublin, Cork and Shannon.”
The acquisition is expected to give Irish businesses better access to IAG’s cargo network and increase Aer Lingus’ capacity by 50 per cent by 2020. It is expected Ireland’s pharmaceutical and semi conductor industries will particularly benefit.
Aer Lingus chairman, Colm Barrington says: “This access to greater global scale will accelerate growth across our network, enhance Ireland’s position as a natural gateway connecting Europe and North America … and provide better access for business interests and cargo flows.”
Shannon Group, which operates Shannon Airport, and daa, which runs Dublin and Cork airports, both welcome the move. Group chairman, Rose Hynes says: “It’s good news; it’s a positive opportunity for Ireland, [it] will safeguard the Shannon Heathrow connectivity for seven years and opens the door to further growth.”
Daa chief executive Kevin Toland says: this transaction will lead to increased employment, as IAG expands its Irish operations in the future.
In December 2014, IAG made an offer to buy the Irish government stake, which was rejected because it undervalued the carrier. IAG made another bid in January 2015, which Aer Lingus accepted in February 2015, because it believed the deal was good for the airline and for Ireland.