Belfast Telegraph

Aer Lingus 'does not need takeover'

A takeover of Aer Lingus by the owner of British Airways would put money in the pockets of top managers while threatening Ireland's economic future, a parliamentary watchdog has been warned.

Union leaders representing thousands of staff at the Dublin-based airliner said the proposed £1 billon deal would leave the country's crucial air links to the US and the UK in the hands of a London boardroom.

Within just a few years, potential buyer International Airlines Group (IAG) could scrap routes in and out in Ireland and use Aer Lingus' much sought after Heathrow slots for more lucrative long-haul flights, it was claimed.

Furthermore, Irish TDs and senators were warned that any guarantees demanded in the event of a deal would be simply worthless as soon as the Dublin government gave up its 25.1% stake in the national flag carrier.

The Aer Lingus board has said it was prepared to accept an offer worth 2.55 euros (£1.90) a share from IAG, in its latest takeover bid.

An acquisition would rest on the backing of the government as well as Ryanair, the other major shareholder.

Captain Evan Cullen, president of Irish Airline Pilots Association, which represents 500 Aer Lingus pilots and owns a 7% share in the airline, said management had a conflict of interest as they stand to make a windfall from any sale.

There was no other reason to sell a growing and profitable airline, he told the Oireachtas (parliament) Joint Committee on Transport hearing into the proposed takeover.

"Aer Lingus does not need IAG, IAG needs Aer Lingus - that is a fact, " he said.

Mr Cullen said there would be an "incredible amount of financial gain" to a small number of managers involved in a takeover that would have huge benefits for IAG to the disadvantage of the country.

There could be no guarantees on the island nation's air links to the other countries, he told the watchdog.

"It is an absolute nonsense for anyone to suggest that (the Government) can put legally binding constraints on the owner when they get their cheque for the shares - it just doesn't happen," he said.

Mr Cullen said recent acquisitions suggest IAG and other carriers would be forced by aviation regulators to continue existing Irish routes for just three or four years, after which the company could use those slots for money-spinning long-distance routes.

Aer Lingus is more profitable that IAG, on a like for like basis, has among the youngest fleets in Europe, the best agreements with air alliances, and one of the best hedged fuel contracts in Europe, according to Mr Cullen.

The only benefit to Aer Lingus of a takeover would be better prices in buying new aircraft, but a strategic agreement with Etihad Airways on combined orders has already taken care of this, he said.

He also suspects IAG would be forced to sell off or mortgage Aer Lingus assets to pay for the takeover.

Mr Cullen said British Airways' "neglect" of Scotland - which has a bigger population than Ireland and a similar sized diaspora, yet only a fraction of its transatlantic traffic - did not bode well for Ireland in the event of a takeover.

Matt Staunton, of trade union Impact, which represents pilots, cabin crew and ground staff at Aer Lingus, said the acquisition would result in up to 1,200 jobs slashed in Ireland, while posing significant risks to the country's business and tourism.

The Government, as guardian of the State, is duty bound to keep a stake in the carrier, he said.

Mr Staunton told the hearing IAG's priority would always be its own commercial interests over Ireland's national interest.

The trade union leader also warned government ministers to take account of a "substantial windfall" for Aer Lingus bosses in the event of a deal when talking to them about the offer.

The committee heard Aer Lingus has 23 prime-time and two seasonal slots at Heathrow, which IAG would be better off using for lucrative transatlantic routes rather than flights to Ireland.

Estimates confirmed by analysts in Dublin and London, based on the British Airways takeover of Iberia Airlines, suggest between 1,000 and 1,200 Aer Lingus jobs would be axed, Mr Staunton said.

This would include 100 job losses each at Shannon and Cork airports.

The airline had stood on its own feet since its inception, survived numerous global crises and several hostile takeover bids, while establishing Dublin as a key hub to North America, he told parliamentarians mulling the proposal.

"This is far from a deadbeat airline," he said.

"At the first sign of trouble in a post-takeover Aer Lingus, IAG will have the power to limit this island's air connectivity to London and US in order to lower its overheads.

"These are two of the most important pumping arteries of the Irish economy.

"An economy in recovery like ours can not afford to trade our future away.

"IAG's commercial interests will always come first."

Mr Staunton said the Irish government would likely get 300 million euro from the sale of its share, which he compared to "a drop in the ocean in a desert of debt".


From Belfast Telegraph