Coveney: Aer Lingus bid not persuasive enough

Fresh doubts have been expressed over IAG’s pursuit of Aer Lingus after one of the Cabinet’s most senior ministers said the current offer is not sufficient for the Government to part with its stake.

Coveney: Aer Lingus bid not persuasive enough

Agriculture Minister Simon Coveney yesterday said the bid on the table from Willie Walsh’s International Airlines Group (IAG) was “not persuasive enough”, casting doubt over the viability of the proposed takeover.

Fine Gael members are divided over the sale of the Government’s 25.1% stake in the airline, the Cork South-Central TD added.

“I have said that the Government needs to be very demanding in relation to what it’s looking for. Our primary concern is not the monetary value of shares, but the public interest of the shareholding within Aer Lingus, particularly for regional airports like Cork and Shannon,” Mr Coveney said.

“We made it very clear that it is up to IAG to make an offer that is persuasive in relation to the public interest and as of yet, we don’t have an offer which is persuasive enough, I suspect,” the minister said on Newstalk.

The Cork TD’s comments are in direct conflict with those of Mr Walsh last week who warned members of the Oireachtas transport committee that when he makes a second offer, it’s often not as good as his first.

He was also adamant that he would not extend his guarantee that routes to and from Ireland would be maintained for more than five years.

Analyst, including Merrion Stockbrokers head of research David Holohan, agreed that the offer on the table was the best the Government could expect.

“If IAG come back with another offer it would exclude the Government. This is the best deal the Government is going to get,” Mr Holohan said.

Discussions have reached the stage where it comes down to whether political posturing and parish politics would prevail over the national interest, he added.

Sources close to the ongoing discussions indicated the minister’s comments show that the Government is “playing hardball” with IAG, from whom the review group are seeking additional information.

“The Government is looking for more detail on different aspects of what has been promised; to provide clear figures around job losses and other issues. They are putting a challenge up to IAG to crystallise what their offer is,” one source said.

The IAG chief confirmed last week that a limited number of job losses would arise should the deal go through but did not provide a specific figure. With strong opposition from Labour TDs, in particular, clarification on the number of positions that would be lost is seen as a key aspect of winning political favour for the deal.

Mr Walsh claimed, however, that any initial job losses would pale in significance to the hundreds that could be created subsequently.

That opinion was backed earlier this week by incoming Aer Lingus chief executive Stephen Kavanagh.

In addition to the guarantee to maintain services on Irish routes, including those to Cork and Shannon, IAG has also promised to provide legally binding protection of the airline’s valuable Heathrow slots which would prevent their sale.

Mr Walsh said the guarantees offered as part of the €2.55 per share deal go beyond the Government’s current level of influence.

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