Aer Lingus board meet to discuss plan to buy out airline

AN urgent meeting of the Aer Lingus board is expected to be convened this week to discuss the audacious plan by three senior executives to lead a management buyout of the airline.

The newly appointed interim chairman of Aer Lingus, John Sharman, is likely to bring forward the next scheduled meeting of directors by several weeks to discuss the implications of the proposal announced by the company chief executive officer Willie Walsh at the weekend.

Mr Walsh and the airline’s chief operations officer, Séamus Kearney, and chief financial officer Brian Dunne have sought permission from Transport Minister Séamus Brennan to develop an investment proposal for Aer Lingus.

The move has led the company to seek legal advice to protect its interests, while awaiting a decision by Government on the plan to privatise Aer Lingus.

Labour transport spokesperson Roisín Shortall yesterday described the unprecedented proposal as “very odd”, especially as it was unclear if the board had any prior knowledge of the plan.

“No convincing argument has been made for the privatisation of Aer Lingus and there is a strong case for retaining the airline in public ownership,” said Ms Shortall. Current market estimates place values of more than €500 million on the airline.

Unions have also voiced their outright opposition to any move towards privatisation. One senior union source claimed it was ironic that Mr Walsh appeared to be offering employees a 24.9% stake under the buyout plan when he was currently refusing to sign off on a planned Employee Share Ownership Trust.

Fearful of creating another Eircom-style debacle through the sell-off of a State asset, opposition to the Aer Lingus buyout proposal is expected to be voiced at tomorrow’s meeting of the Cabinet. However, some ministers, including Tánaiste Mary Harney, are known to be strongly supportive of the airline’s privatisation.

While the Government recognises the need for part-privatisation of the company due to restrictions under EU competition law on the State investment in Aer Lingus, it is likely to defer any decision on Mr Walsh’s proposal until after the summer recess.

One Government source described the move to take the company private as “partially tactical” in order to force ministers into an early decision on the airline’s future.

It is understood Aer Lingus management has ambitious plans to transform the national carrier into a major low-cost operator on transatlantic routes by offering return fares for less than €200 on many US routes.

In one of his first tasks as chairman, Mr Sharman - who agreed to take the job on the basis that it is a temporary appointment - will hold a meeting with the company’s secretary today at which they are likely to discuss how to deal with a potential conflict of interest among the management team.

The appointment of a new chairman for Aer Lingus is due to be announced by the end of the month, according to Government sources.