Too many unresolved issues for Government to consider selling its Aer Lingus shareholding

26 January 2015

by Cllr Joe Costello

There are too many questions to be answered for the Irish Government to consider selling its shareholding in Aer Lingus to IAG at present. The EU Competition Authority rejected Ryanair’s attempt to buy Aer Lingus recently and there are likewise competition issues involved in the parent company of British Airways making an offer for Aer Lingus.

Moreover there is an immediate challenge to Ryanair from the decision of UK Competition and Markets Authority that it reduce its stake in Aer Lingus to 5%.  The outcome of that decision could have a major impact and could open the market for the purchase of Aer Lingus to competition.  There are also unresolved issues around the IASS pension scheme

Aer Lingus is profitable with an enormous cash kitty of approximately €400 million plus its 29 Heathrow slots which are worth a further €400 million.  So a €1.3 billion value on Aer Lingus appears to be bargain basement price.  With Ireland, an island nation, having to export 85% of everything it produces and transporting 7 million tourists to and from the country annually by air, it is absolutely essential that every area of future connectivity, including the valuable London slots are tied down before any decision is contemplated.

The reason for retaining the 25% stake when Aer Lingus was privatised in the mid-1990s was to protect the national interest.  In this respect nothing has changed.