Willie Walsh expects Ryanair ‘to act rationally’ when Aer Lingus offer made

International Airlines Group chief Willie Walsh says he expects Ryanair to act in a “rational way” to its takeover bid for Irish flag carrier Aer Lingus.

The British Airways owner will make a formal offer within the next 28 days for Ryanair’s near-30% stake in Aer Lingus.

The move, part of a €1.4bn deal, was made possible after the Government gave it the green light, despite previous attempts to persuade Dublin having faltered.

Signalling his confidence that Ryanair would now accept the IAG bid, Mr Walsh said there was a “compelling offer” on the table for its shareholders.

“I believe Ryanair will see the merit of the case we have made, the value we are offering in terms of this takeover and will want to see the deal go through,” he said.

Mr Walsh said he has not talked to Ryanair in recent weeks and could not cut any deal with the low-cost carrier on routes or other arrangements, under competition and takeover laws.

IAG is offering Aer Lingus shareholders €2.55 in cash per share, under the proposed deal backed by the airliner’s management but disputed by trade unions and opposition parties.

Mr Walsh said that offer “was the limit” and suggested he was not expecting Ryanair to frustrate the bid.

“I expect Ryanair to behave in a rational way, they are a well run business with proper corporate governance in place,” he said.

Ryanair said: “Our position has not changed. The board of Ryanair has yet to receive any offer, and will consider any offer on its merits, if and when an offer is made.”

In a press conference in Dublin, Mr Walsh said his long-running battle to persuade the Government to sell its 25% stake in Aer Lingus was a first step in a move that would allow IAG to grow the company.

Under terms struck with the State, “legally binding” commitments have been given on routes in and out of Ireland, as well the Aer Lingus brand being retained and the airliner being headquartered in Dublin.

Dubliner Mr Walsh was formerly a chief executive at Aer Lingus, where he worked for 25 years.

The airline boss said he knows better than most the “pride, loyalty, and affection” Irish people have for Aer Lingus and insisted the takeover would enhance it for customers, employees, and the country.

“I’m not coming back here to make this offer because it is some attachment to Aer Lingus, I’m coming back here to make this offer because Aer Lingus is a good company that will fit extremely well with IAG,” he said.

“This is not a Willie Walsh initiative, this is an initiative made by IAG, fully supported by the board of IAG who are excited about this prospect.”

Mr Walsh said he planned to grow the brand in the US particularly, and add long- haul routes. He admitted that there would be some job losses in Dublin, particularly in finance and IT, but vowed the deal would increase jobs overall at the carrier.

British Airways will continue to serve Dublin and Aer Lingus will continue to operate in Belfast, he added.

“We believe Ireland is a growth market, the economy here is growing, there is huge demand into Ireland, particularly from the US, I think that demand is lik- ely to grow as well and we want to be part of that,” he said.

The takeover offer is conditional on acceptances by at least 90% of shareholders.

Cantor Fitzgerald analyst Robin Byde said: “Although the company has good access to finance for its large new B737 aircraft orders, the additional cash would no doubt be welcome and may also accelerate planned buy-backs or further special dividends.”

Shares in IAG, which also owns Spain’s Iberia, rose 1%, while Ryanair added 1% and Aer Lingus was up 2%.

The background to the transaction is complicated by a long-running battle fought by Ryanair against UK competition authorities, which have ordered it to cut its stake in Aer Lingus.

Jefferies analysts described Ryanair as the “kingmaker”, saying it “may yet prove troublesome”: “We would not be surprised to see Ryanair play hard ball.

“Presumably if Ryanair rejected the offer as too low, the onus would be on IAG to return with a higher bid for all shareholders.”

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