Belfast Telegraph

BA owner near deal for Aer Lingus

The owner of British Airways today appeared to be on the brink of a major breakthrough in its 1.33 billion euro pursuit of Dublin-based carrier Aer Lingus.

A third and improved proposal from International Airlines Group (IAG) has reportedly won the backing of the carrier's board.

IAG still requires the support of the Government, which holds a 25% stake in Aer Lingus and will want reassurances from the BA and Iberia owner over its plans for the key Dublin to Heathrow route.

Low-cost airline Ryanair, which owns just under 30% of Aer Lingus following a series of failed takeover attempts, may be tempted to sell at the new offer price of 2.50 euros a share.

It is expected that IAG and Aer Lingus will make statements to the London Stock Exchange on Monday. The Aer Lingus board rejected previous bids from IAG worth 2.30 and 2.40 euros a share.

Aer Lingus is well known to IAG boss Willie Walsh as he ran the airline between 2001 and 2005 before taking the helm at British Airways.

IAG's interest in Aer Lingus stems from its desire for additional Heathrow runway slots as well as the opportunity to deliver more industry cost efficiencies.

Aer Lingus is the fourth busiest operator at London's Heathrow behind British Airways, Lufthansa and Virgin Atlantic.

Its fortunes have improved in recent months and under chief executive Christoph Mueller it reported the airline's strongest summer trading performance since the financial crisis, with operating profits up 19% to 112.9 million euros in the quarter to September 30.

The airline carried nearly a quarter more long-haul passengers in the period than a year earlier while increasing its revenue per seat.

It plans to launch a new Dublin to Washington service in May and will also increase services on existing transatlantic routes.

IAG was formed from the merger of British Airways and Iberia in 2011.

It has around 430 aircraft and employs more than 60,000 people. A restructuring programme at the previously loss-making Iberia has seen 2,500 staff leave the airline under a voluntary redundancy programme.

IAG recently forecast it will make a bigger than expected profit for 2014, stepping up pressure on rivals Air France-KLM and Lufthansa.

Ryanair has been frustrated in its attempts to buy Aer Lingus and has been told by UK competition authorities to sell down its stake because it potentially distorted the market for flights between Ireland and Britain.

Meanwhile, Ireland's deputy prime minister has warned that protecting Ireland's air links with Europe and the US is of vital importance if the deal is to go through.

Tanaiste Joan Burton said retaining valuable slots in Heathrow is critically important for the Irish Government and for the country in terms of inward investment, exports, business and tourism.

"What we will want to do as a Government, and what's absolutely important, is to protect these slots and the connections of direct flights in and out of Ireland," she told RTE Radio.

Ms Burton refused to be drawn on whether the deal hinges on a guarantee period during which the slots would be retained.

But she noted the importance of Ireland as a transit hub for people flying to the US and using pre-clearance facilities in Dublin and Shannon.

"It's very, very important. That will be absolutely foremost in the Government's mind in terms of Aer Lingus," she said.

It is understood Irish cabinet ministers will discuss the future of Aer Lingus during its weekly meeting on Tuesday.

Other issues said to be key factors in the Irish Government's position on a sale include job security for Aer Lingus workers in Dublin, Shannon and Cork airports.

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