Individual investors will need to have €10,000 or more to invest in Aer Lingus when it lists on the Dublin and London stock exchanges in late September, Minister for Transport Martin Cullen has decided. Shares in the airline, which has been valued at up to €1.1 billion, will be aimed primarily at institutional investors. However, after a debate in Government circles, it has been decided to make shares available to members of the public (described as "retail investors"). Emmet Oliver reports.
But to avoid a repeat of the Eircom privatisation in 1999, a minimum level of investment of €10,000 will be required.
Senior Government sources have indicated that airline stocks can be highly volatile and, as a result, it was thought prudent to introduce such a limit.
The Irish Times has learned that at one point the Government considered not offering any shares to retail investors, but it was decided some individuals would be very keen to invest in the airline and they should be facilitated, albeit with a minimum investment level.
The airline's management has long supported the idea of giving the public at least some access to the shares. Last year, Aer Lingus chairman John Sharman said it was right that the airline's passengers be allowed to invest in the company.
Yesterday in the Dáil, Mr Cullen said financial intermediaries would be able to offer the shares.
He was speaking after a Government motion, allowing for the disposal of the airline's shares, was approved by 68 votes to 54.
Labour, the Green Party, Sinn Féin and some Independents expressed their opposition, while Fine Gael said it recognised the airline's needs for fresh funding. However, its transport spokeswoman, Olivia Mitchell, said the "general principles" of the sale must be approved by the Dáil and this had not happened yesterday.
Mr Cullen also disclosed that protection for landing slots at Heathrow airport will be written into the articles of association of the company. These articles could not be subsequently changed if the Government, which intends to hold on to a 25.1 per cent stake, was not in agreement.
Mr Cullen denied the 25.1 per cent was a "golden share". He said the Government would simply be using its voting rights based on its shareholding. He said measures would be taken to ensure the unions were also able to maintain their 14.9 per cent stake. It is understood a profit-sharing scheme will be used to deal with this.
In his speech, Mr Cullen said he believed measures needed to be taken to protect the landing slots at Heathrow, but he said the importance of Heathrow could be overstated.
He added that other international hubs, such as Amsterdam, Paris and Dubai, were growing in importance.
The stipulation that €10,000 will be needed to participate in the offer will effectively price many people out of the flotation. With an average industrial wage of approximately €27,000 per annum, this limit will exclude a large number of ordinary investors, many of whom may have invested in Eircom.
However, individuals are still free to borrow the funds from banks and other lenders.
Airline stocks have been struggling over the last year, mainly because of high oil prices.
Aer Lingus has been under pressure too, with profits down to €82 million in 2005.
The company is now carrying its highest level of passengers - eight million per annum - but it is carrying them for less money. This is due to competition on short- and long-haul routes. Ryanair in particular has been increasing its capacity on European routes.