Aer Lingus appoints financial advisers

AER Lingus put the for sale sign up yesterday. The national airline has appointed two financial advisers ahead of its privatisation.

The State-owned carrier said yesterday that Merrion Capital and Goldman Sachs will advise on how best to maximise the airline's value.

The appointment of Goldman Sachs is no surprise as the investment bank had previously advised the Government on its options for Aer Lingus.

Merrion Capital, meanwhile, are highly respected in the Irish financial community and are known for their fiercely independent research.

Aer Lingus says outside finance is essential if the airline is to expand its fleet and develop new routes.

"This appointment of our corporate advisors comes as discussions on the privatisation process are now entering a critical phase. Merrion Capital and Goldman Sachs will begin their work immediately," Aer Lingus chief executive Dermot Mannion said yesterday.

Mr Mannion, who joined Aer Lingus in August, has already signalled the airline's expansion with the launch of a first route to the Middle East, a three times weekly service to Dubai.

But the €2 billion required for a full fleet upgrade cannot be financed from the company's existing resources. And with profits this year set to fall to around €60 million (down nearly €40m), external finance is the only way for the carrier to expand.

Mr Mannion says he believes the privatisation either through a stock market listing or a partial sale to private equity investors needs to happen by this time next year.

The final decision rests with the Government, whose own financial advisers, AIB and Swiss bank UBS, are studying privatisation options.

The best option for Aer Lingus would be to sell shares on the stock exchange. Though given the run up to the general election in 2007, political factors could play a part in the privatisation.