Government expects new IAG bid for Aer Lingus

The Government expects IAG to make a fresh approach for Aer Lingus, according to sources, with speculation in the market

it could bid over €2.40 a share.

Aer Lingus chairman Colm Barrington is, meanwhile, emerging as a central figure in the likely takeover battle, with the company announcing yesterday he would take over responsibility immediately for "strategic matters" from chief executive Christoph Mueller.

Mr Mueller will now leave the airline at the end of next month, earlier than the previously announced departure date of May.

The company said in a statement that Mr Barrington would take full executive responsibilty from March 1st, if needed, pending the start date of a new chief executive.

IAG made an approach to the Aer Lingus board in mid-December and is believed to have offered around €2.20 a share, a price rejected by the airline’s directors as fundamentally undervaluing the company.

Speculation

Sources believe that IAG, led by former Aer Lingus chief executive

Willie Walsh

, is now considering a higher offer, with speculation in London of a price of over €2.40 a share. The company’s shares closed yesterday at €2.20, but a significant premium would be expected if investors were to agree to sell.

As well as the Government, the other key shareholder is Ryanair, which owns a 29.8 per cent stake. Its attitude to a likely offer is not clear. The UK court of appeal is expected to rule shortly in support of an earlier UK competition ruling that the Ryanair stake in Aer Lingus must be sold down to, at most, 5 per cent.

The key issue for the Government is the Aer Lingus slots at Heathrow, and whether IAG would continue to use them for Irish traffic or reallocate some of them to potentially more lucrative long-haul routes.

IAG would be expected to outline its plans in tandem with a bid, though stock market rules could make it complicated for it to offer specific concessions to any one shareholder.