IAG may offer fresh guarantees to secure Aer Lingus deal

British Airways parent IAG would consider improving commitments made last week to help win Government backing for its planned takeover of Aer Lingus, according to sources cited by Bloomberg.

Should the Government communicate additional demands, then London-based IAG is open to revising its proposal, which so far includes guarantees not to sell Aer Lingus’s slot pairs at Heathrow or drop the carrier’s brand, the sources said. A spokeswoman for IAG declined to comment.

Aer Lingus shares have tumbled in recent days on the back of speculation the Government is preparing to reject IAG’s indicative offer for its 25 per cent stake in Aer Lingus.

A final decision has yet to be taken. Other concessions that IAG has made include a guarantee that it would operate slots on Irish routes for five years. The company has not specified any plans for job security, a key element for the Government.

IAG chief executive Willie Walsh is seeking to overcome mounting political resistance to the proposed takeover of an airline he ran until 2005.

To support his push, Mr Walsh plans to travel to Dublin tomorrow to meet the Government review group.

London-based IAGsaid it would not proceed without the endorsement of the Irish administration, with the two coalition parties trailing in the polls a little over a year before a scheduled general election.

The Aer Lingus board said last month that it was prepared to recommend an indicative offer of €2.55 per share from IAG, as International Consolidated Airlines Group is known, having rebuffed two earlier approaches. The offer values Aer Lingus at about €1.36 billion.

Talks between IAG and Government officials and advisers are expected to conintue this week, but there is no indication that the Government is warming to the idea to selling its shares.

Transport minister Paschal Donohue said that no decision had yet been taken and the Government “is still assessing what would be in the best interests of the country and of Aer Lingus”.

Additional reporting Bloomberg