Willie Walsh: Airline at risk if IAG deal fails

The viability of Aer Lingus would be in doubt if the proposed merger with IAG does not go through, according to IAG chief executive Willie Walsh.

“Aer Lingus’s ability to survive as a niche standalone carrier going forward would be challenging in an industry that is consolidating,” said Mr Walsh.

IAG is in negotiations with the Government about selling its 25.1% stake in Aer Lingus. Mr Walsh spoke to the Irish Examiner last night ahead of his appearance today before the Oireachtas Joint Committee on Transport and Communications.

The committee is meeting at his request so that he can address a number of issues, he said. “I was surprised I had not been invited.”

Mr Walsh said he had a positive meeting with Transport Minister Paschal Donohoe yesterday to discuss the Government’s concerns about a potential sale. These include keeping the Aer Lingus brand, job losses, and connectivity to London.

The IAG chief executive said he “absolutely guarantees” the Aer Lingus brand will not be changed. The strategic rationale of IAG’s interest in the part state-owned airline is “grow the business and make it more profitable”.

IAG is prepared to insert “legally binding cast-iron guarantees” in the sale agreement that would give the Government a veto over the future of the 23 Heathrow slots from Cork, Dublin, and Shannon.

“We are the only ones that would do that. Anybody else looking at Aer Lingus could not, and would not, be able to do that. That should go someway towards putting people at ease,” he said.

IAG is also prepared to guarantee the existing London routes from the three airports for a minimum of five years.

“The Government currently does not have these guarantees,” he said. These legally binding agreements would remain even if IAG was sold or there was a management change, he added.

There would be a small number of job losses as back office functions would be moved to London, “but overall there would be net job creation as the airline grows”.

Mr Walsh described as “nonsense” the suggestion by the trade union Impact that 1,200 jobs would be lost. “You couldn’t run Aer Lingus with 1,200 less people,” he said.

He said it was a “no brainer” that IAG would continue the Aer Lingus routes from Cork and Shannon. Both routes are profitable and would be a lucrative source of business for IAG’s international hub based out of Heathrow.

Mr Walsh is a former chief executive of Aer Lingus. The Labour Party is believed to be concerned about a potential sale of Aer Lingus so close to an election.

However, the Government has already decided the airline is not a strategic asset and it would be prepared to sell if the price was right, Mr Walsh said.

He described as inaccurate recent reports that the Heathrow slots could be worth over €1bn. He said IAG in 2008 bought BMI, which had 54 Heathrow slots, for £172.5m. The €1.36bn IAG is prepared to pay contains a very generous premium, he said.

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