International Consolidated Airlines Group has cleared a major hurdle in its bid to acquire Aer Lingus after the Irish government agreed to sell its 25-percent stake. The deal now requires support from rival Ryanair.
The government in Dublin has paved the way for a formal bid for Aer Lingus by International Consolidated Airlines Group (IAG) after agreeing to sell its 25-percent stake to the owner of airlines British Airways and Iberia.
After a cabinet meeting on Tuesday, transport minister Paschal Donohoe said "extremely important changes" in IAG's previous offer had led to the government's decision.
Under the deal, IAG offers Aer Lingus shareholders 2.55 euros a share - 2.50 euros plus a 0.05 euros dividend - valuing the airline at 1.36 billion euros ($1.7 billion).
"Acquiring Aer Lingus would add a fourth competitive, cost-effective airline to IAG, enabling us to develop our network using Dublin," IAG Chief Executive Willie Walsh said in a statement.
The sale of the government's stake now enables IAG to make a formal bid to the Aer Lingus' other major shareholder, low-cost carrier Ryanair, which holds a 30-percent stake. Ryanair spokesman Robin Kiely told the news agency AFP its board "will consider any offer on its merits, if and when an offer is made".
The sale has been a hot topic for Dublin, with severe opposition within the junior government coalition party, Labour, and from unions who warned about implications for jobs and aviation connectivity.
But late Tuesday night a group of eight Labour lawmakers, who had questioned the deal, backed the proposals, saying they were "satisfied" their concerns had been met.
Dublin said IAG had made commitments on the future of the airline, promising to maintain the brand, sustain its existing routes, create new jobs and ensure the airline's lucrative landing slots at London's Heathrow airport would not be sold for seven years.
But labor unions reiterated their fears about job losses and deteriorating working conditions after restructuring, saying they would oppose the sale if their concerns were not addressed.
Ireland's largest public sector trade union IMPACT said the takeover would be "bad for jobs, for Aer Lingus workers and for Ireland's connectivity and economic development".
"The interests of IAG shareholders will always trump the interests of the Irish economy and the Irish travelling public," the union said in a statement.
The leader of the opposition Sinn Fein party, Gerry Adams, said earlier on Tuesday that IAG's concessions would be "merely a stay of execution" on the airline's valuable Heathrow slots.
Ireland's ruling coalition will put the decision to a vote in parliament on Wednesday, while the European Commission will have to assess the takeover on competition grounds later on.
uhe/pad (Reuters, AFP, dpa)