Cabinet clears IAG bid for Aer Lingus

The Government has given the green light for its sale in Aer Lingus, paving the way for what it claims will be extra jobs for the airline, guarantees on the protection of slots and more services for passengers.

Cabinet clears IAG bid for Aer Lingus

But there were concerns raised last night the sale to airline giant IAG would result in job losses starting from next year, and that it would hand the Coalition a €335m pre-election slush fund.

Transport Minister Paschal Donohoe outlined the Government support for the €1.36bn deal last night, following Cabinet agreement-which will see the State offload its 25% shares in Aer Lingus. The deal includes:

  • Aer Lingus slots at Heathrow will be held for an unlimited period of time, providing better protection for Ireland than at present;
  • Routes between London Heathrow and Dublin, Cork, and Shannon are guaranteed for seven years, two years more than the last IAG bid;
  • By 2020, the merger will deliver an extra 2.4m passengers, four extra routes to North America and eight extra aircraft. Two of the new transatlantic services will be next summer;
  • Dublin will become a “gateway hub” for transatlantic routes. There are legally binding commitments to keep the Aer Lingus brand and its head office in Ireland;
  • Aer Lingus routes from Cork to Paris and Amsterdam will be continued, and “growth opportunities” for tourism in Munster will be pursued. New routes could include to 13 IAG bases in Spain;
  • At Shannon, services to Boston and New York will be strengthened, while services will grow at Knock.

READ NEXT: Enda Kenny bids to ease Aer Lingus sale concerns

The Government, while not itself giving any specific guarantees on jobs, said it had received a letter from Aer Lingus chief executive Stephen Kavanagh in which it claimed there would be no redundancies or outsourcing of work.

But unions last night immediately said this was not a watertight guarantee, especially as the letter stated that this was the case as long as the company’s financial position remained positive.

Siptu said it would “vigorously oppose the Government plan to sell off” its shares. Owen Reidy, divisional organiser with the union, which predominantly represents ground crew, said his union would require the commitments on outsourcing and redundancies to be written into registered employment agreements (REAs).

Aer Lingus said it would expand the scope of REAs to include staff groups not covered by the deal.

Mr Donohoe said there would be 635 jobs created by 2020. However, he also admitted that while 150 net jobs were planned for next year, there would be “changes” for another 50.

He said the €335m from the State’s sale of Aer Lingus shares would go toward a “connectivity” fund which will be outlined in the coming days. This could be spent on roads, ports or airports, he said.

Fianna Fáil’s Seán Fleming said this would be used to buy votes: “The sale of a national treasure is being used to set up a slush fund for the election.”

More detail on the deal with IAG, the parent company of British Airways, will be outlined in the Dáil today.

IAG’s bid for Aer Lingus cannot be completed until Ryanair, which owns 30% of the airline, gives it approval. The deal will also be scrutinised, for competition purposes, by the European Commission.

The Government agreed the deal based on €2.50 a share and IAG, run by former Aer Lingus boss Willie Walsh, made its bid known to the stock exchange last night.

Taoiseach Enda Kenny earlier told the Dáil that any sale of the State’s shares would be in the “best interests of the whole country”.

Business groups and tourism agencies welcome the deal last night, but unions and some TDs said more detail was needed on the guarantees.

READ NEXT: GERARD HOWLIN: Will we pay in the future if we sell our share in Aer Lingus now?

READ NEXT: Business groups and unions clash on Aer Lingus deal


More in this section

Puzzles logo

Puzzles hub

Visit our brain gym where you will find simple and cryptic crosswords, sudoku puzzles and much more. Updated at midnight every day. PS ... We would love to hear your feedback on the section right HERE.