Cabinet holding out for stronger IAG bid

There is agreement at senior Government level that a stronger bid for Aer Lingus can be sold to workers and TDs on the ground if better terms and guarantees are offered by aviation giant IAG. 

Cabinet holding out for stronger IAG bid

However, senior Coalition sources last night insisted the Government would not be “bounced” into selling its 25% stake in the airline.

The position comes after the Coalition yesterday rejected the tentative offer by International Airlines Group, citing concerns about jobs and guarantees on slots.

Transport Minister Paschal Donohoe said that the IAG guarantee that Aer Lingus would keep its Heathrow slots needed to be longer than for five years. He said he had advised the Cabinet not to accept the bid.

Other concerns include the need for more detail on proposed new US destinations and further growth for Cork and Shannon. Mr Donohoe also said clarity was needed on any employment changes, including any rationalisation of jobs.

Mr Donohoe said the Government was open to considering any improved offer.

Last night, senior Government sources said Fine Gael and Labour were in agreement on the issue, especially after the strong results for Aer Lingus released yesterday. These showed a near 18% jump in operating profit for 2014, to €72m. Last year also saw the airline carry more than 11m passengers, the most it has ever had in one year.

Impact, the largest union at Aer Lingus, said these figures proved the airline could exist as an independent player. The union said it still has concerns over job and connectivity assurances from IAG and said it is “doubtful” that IAG will address the issues.

A senior Government source said: “We’re waiting to be convinced that this is the right thing to do and we’re not going to be bounced into it.

“It’s not toxic, but it is very politically sensitive.”

Labour party sources said a 10-year guarantee on the airline keeping its slots at Heathrow could help seal the deal for nervous TDs reliant on support in certain constituencies.

One senior party source said better terms in an alternative bid would also appeal to workers.

“If the money’s right for those boys, they’ll do it. They know which side their bread is buttered on,” said the source.

However, IAG boss Willie Walsh last week indicated to an Oireachtas Committee that he would not improve the bid for Aer Lingus.

Aer Lingus’s incoming CEO yesterday urged those opposed to the airline’s sale to drop their sentimental stance over its change of ownership and embrace the growth opportunities.

Stephen Kavanagh — who formally takes over from Christoph Mueller this weekend — said the approach from IAG has been “a vote of confidence” in the strength of the airline as a business.

A number of Labour TDs will meet today to discuss bringing an emergency motion about their concerns before their party conference in Kerry on the weekend. This is expected to address a desire to see a better deal for the airline but may go further in asking the party to oppose the Government’s sale of its shares if certain guarantees are not met.

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