Growing sense IAG offer for Aer Lingus could be headed for departures

Right or wrong, there is a growing sense that Aer Lingus could slip from International Consolidated Airlines' Group's (IAG) grasp purely because the level of political noise that followed its takeover approach has completely spooked the Government.

There are suggestions that the Cabinet will not agree to sell the State's 25.1 per cent stake in Aer Lingus. This would prevent a deal going ahead as IAG has said any offer would be conditional on getting acceptances both from Minister for Finance Michael Noonan (right) and Michael O'Leary's Ryanair.

There is, however, another scenario: IAG could still pick up the remaining 74.9 per cent of the airline. Ryanair’s battle to hold on to its 29.8 per cent stake is edging towards its endgame and it could agree to sell. The institutional shareholders are said to be happy with the price, while many of the retail shareholders stand to gain handsomely at €2.55 a share. That just leaves the State.

IAG might be satisfied with just under 75 per cent as this gives it control. The Coalition could sell this as a “partnership” and point out triumphantly that the veto over the sale of Aer Lingus’s landing and take off rights at Heathrow airport remains. It could probably continue to nominate two members to the airline’s board.

Of course such an arrangement would not be a partnership. The Heathrow veto only covers the sale of the rights.. It does not prevent them being leased, temporarily swapped or otherwise transferred. It certainly falls short of the guarantee offered by IAG that, if it gets full control of Aer Lingus, the slots will only be used to serve Irish routes for five years.

IAG and its Irish head Willie Walsh may well walk away if they can't get 100 per cent. If they do almost 75 per cent of shareholders will be disappointed, but the Government, you suspect, will be relieved.