IAG approach for Aer Lingus estimated at €1bn

The bid to buy Aer Lingus by rival group International Consolidated Airline Group (IAG) could have valued the Republic's flag carrier at at least €1 billion, industry sources estimate.

Aer Lingus shares surged by more than 20 per cent at one point yesterday on news it had rebuffed a possible takeover approach from IAG, the group led by former Aer Lingus chief executive Willie Walsh. It owns British Airways, along with Iberia and Vueling.

Neither side would reveal what value IAG’s approach put on the Irish airline, but sources suggested it would have to have been more than the €970 million-plus that it was worth when its shares closed at €1.82 on the Dublin stock market.

Analysts believe that in order for the approach to be considered realistic, it would have had to be in the region of €1 billion, or about €1.87 per share.

This would have put a price tag of between €250 million and €275 million on the Government’s 25 per cent holding and valued Ryanair’s 29.8 stake at between €298 million and €328 million.

As they are the two biggest shareholders, any attempt to buy Aer Lingus would have to win the approval of both.

Ryanair is fighting a legal battle to retain its holding, but said last year it would be willing to sell it to any European airline that had the backing of 50.1 per cent or more of Aer Lingus's shareholders.

Although the airline said it does not “comment upon or engage in rumour or speculation”, it is likely its position on a sale has not changed.

Aer Lingus is awaiting the outcome of its challenge in the British court of appeal to a ruling by the UK mergers regulator, the Competition and Markets Authority, that Ryanair must cut its Aer Lingus stake to 5 per cent.

That judgment is not expected until the new year. Ryanair has pledged to appeal the matter “all the way to Europe” if necessary.

Minister for Transport Paschal Donohoe said the IAG approach was a matter for the board. The Government has said it would consider selling its stake "only when market conditions are favourable and on terms and at a price that are acceptable".