Confidence vote could sprout buyout

Etihad’s decision to buy a 3% stake in Aer Lingus is a vote of confidence in the Aer Lingus business plan and could be a precursor to a buyout of the 25% stake owned by the Government.

Bloxham analyst Joe Gill said a number of issues were raised by the Abu Dhabi-based airline’s move to buy a stake in Aer Lingus. These range from the Government’s concerns about the Aer Lingus brand, to the actions of Ryanair and concerns over the large hole in the airline’s pension fund.

Although Mr Gill said the decision by Etihad to buy into Aer Lingus was an endorsement of the Irish airline’s business plan, all analysts agree that the pension issue needs to be resolved before they buy a larger stake. Aer Lingus may eventually have to contribute to a pension deficit that rose to €700m at the end of 2011.