Decision on IAG Aer Lingus offer could take weeks

A Government decision on the sale of the State's 25.1 per cent stake in Aer Lingus to International Consolidated Airlines Group (IAG) will have to wait at least until after Friday's constitutional and byelection votes are out of the way.

British Airways's parent IAG says it is willing to pay €1.36 billion for Aer Lingus, once both the State and Ryanair agree to sell their respective stakes, which together amount to 54.9 per cent of the Irish flag carrier.

The Government is due to receive recommendations from Government officials and advisers who have been negotiating the terms of a possible sale of the State’s stake with IAG representatives for several months.

However, the Cabinet is likely to wait until after Friday’s referendums and the Carlow- Kilkenny byelection before deciding on a sale of the State’s Aer Lingus shares. Sources say that it could take several weeks before the Government makes its views known.

The Coalition is also concerned that guarantees offered by IAG that Aer Lingus’s valuable landing and take-off slots at Heathrow will be protected do not fall foul of regulators in Brussels. The future of the slots has been central to the talks between the IAG and the Government, which wants commitments that they will only be used to service flights from the Republic’s airports.

The European Commission’s competition directorate would have to approve IAG’s takeover and the Government fears there is a risk that it could question elements of any Heathrow deal.

The Cabinet is understood to be trying to establish if Brussels will pass those guarantees if it reviews a formal offer for Aer Lingus from IAG.

Meanwhile, Ryanair chief executive Michael O’Leary, has said the airline will sue the UK’s competition regulator if its challenge to a ruling demanding that it cut its Aer Lingus stake to 5 per cent from 29.8 per cent is successful.

Ryanair is appealing a UK Competition and Markets Authority ruling that it sell off most of its Aer Lingus shares to the British Supreme Court.

Mr O’Leary warned over the weekend that the airline would seek all of its legal costs and compensation for damage to the value of its Aer Lingus shares if its appeal succeeded.