Aer Lingus will grow if IAG bid succeeds, says Willie Walsh

Aer Lingus will grow both its transatlantic business and its fleet if International Consolidated Airlines Group (IAG) succeeds in taking over the Irish carrier, according to its suitor's chief executive, Willie Walsh.

IAG is proposing to offer €2.55 a share – a total of €1.36 billion – for Aer Lingus, and has been in talks with the Government regarding the State’s 25.1 per cent holding in the airline for the two weeks.

Mr Walsh made it clear that his company, owner of British Airways (BA), Iberia and Vueling, is drawn to Aer Lingus by the potential if offers to develop Dublin Airport as a hub for passengers flying between Europe and America.

Speaking after outlining IAG's proposals to Minister for Transport Paschal Donohoe on Wednesday, Mr Walsh argued that IAG's European network and sales force, combined with that of its US partner, American Airlines, would considerably boost the growth already achieved across the Atlantic by Aer Lingus.

In 2014, 2.1 million passengers flew between Dublin and North America, around one- third of them connected from airports elsewhere in Europe, particularly Britain.

Joint venture

“The ability to do that is not only enhanced, but made even more exciting by being part of a joint venture between two very strong groups,” Mr Walsh said.

He said what Aer Lingus is already doing would benefit from the “full sales power of American Airlines, full access to their frequent flier programme and customer base at the American end”, along with similar BA structures at the European end.

At the same time, he added that Aer Lingus would also be plugged into Spanish carrier Iberia's hub at Madrid Airport, which offers large numbers of routes to Latin America.

Mr Walsh said that these passengers would be channelled through Dublin by Aer Lingus, not by any other IAG airline.

He indicated that its existing fleet would be increased beyond current plans to carry the extra traffic with the aid of the larger group’s buying power.

He noted that Aer Lingus’s current fleet plan is modest as it is limited by what can be achieved with its balance sheet.

However, he would not be drawn on specifics when it came to predicting how many extra passengers the IAG proposals are likely to generate. He said that he was limited in what he could say by takeover panel rules, which govern deals involving listed companies.

No guarantees

Mr Walsh also argued that he would be crazy to extend a guarantee that Aer Lingus’s Heathrow rights would only be used to service Irish routes beyond the proposed five years, as this would affect his bargaining power with suppliers and airports.

Politicians concerned about the impact of a deal on those rights have been calling for that period to be increased.

Controversy

Mr Walsh suggested that if the deal were not to go ahead, the controversy surrounding it could send the wrong signals about doing business here.

“Given some of the things that have been said about the Government’s ability to interfere with the commercial operation of Aer Lingus, which I don’t buy into, a lot of the comments that have been made would not be supported by fact,” he said.

"But they have been made, [and] it potentially doesn't send a very positive message about doing business in Ireland. "