IAG deal ‘best prospect’ for long-term growth of Aer Lingus

Minister for Transport Paschal Donohue said guarantees on Aer Lingus's slots at Heathrow and jobs at the airline will remain in place even if International Consolidated Airlines Group is sold or taken over.

The Government is recommending the sale of the State's 25.1 per cent stake in Aer Lingus to IAG and is set to put a motion to the Dáil on Wednesday, followed by a vote on Thursday.

Under the terms of IAG’s offer, the Minister for Finance will retain a special “B share” in Aer Lingus which will allow changes to connectivity to be made only with the consent of the government of the day.

The B share will underpin legally binding guarantees on all the airline’s existing take-off and landing rights at Heathrow Airport for an “unlimited” period of time. The current daily services between the London hub and Dublin, Cork and Shannon will be maintained for “at least” seven years, with the final two years conditional on airport charges not increasing beyond specified levels.

Speaking on RTÉ radio on Wednesday, Mr Donohue said the guarantees he had secured would be written into the articles of association of the airline.

“We have secured certain guarantees that the State does not have at the moment. We’ll now move to a situation where we will be the only people... the only stakeholder that will have a role in relation to the the disposal of slots and we will also oversee a seven-year guarantee in relation to slot usage that does not exist at the moment,” he said.

“These guarantees will be enshrined into the articles of association of the airline thereby giving them legal robustness.”

He said he had a commitment from Aer Lingus chief executive Stephen Kavanagh and the airline that they did not foresee compulsory redundancies or the use of outsourcing at Aer Lingus.

“We have a commitment in relation to the creation of over 630 new jobs by 2020. The Government believes this offer is the best prospect for the long term growth of Aer Lingus,” he said.

While he said there could be 50 jobs lost in the short term, there would also be 150 new jobs created next year.

Asked whether the EU would allow the deal to go through, Mr Donohue said he had indications that it would not be opposed.

“We have had contact already over a period of time with the EU Commission in relation to the legal mechanisms,” he said. “I wouldn’t be going ahead or asking for the support of Cabinet in this if these guarantees were not robust.”

He denied overall control of the airline would move to London saying Aer Lingus headquarters would continue to be registered in Ireland and operational decisions would be made by the team here.

He said money from the sale would not be used to address problems at the airline’s deferred pension fund.

Minister for Justice Frances Fitzgerald hailed the Aer Lingus deal as a positive development.

“It’s good for the economy. It’s good for Aer Lingus. It’s good for business. It’ll be good for tourism,” she said.

“I think it’s a very positive development and I would really congratulate Minister Paschal Donohoe on the painstaking work and the detail with which he’s carried out the job of examining the offer and which led to the decision that we made yesterday.”

The matter was discussed at Tuesday’s Cabinet meeting. Ms Fitzgerald said a range of guarantees would be put in place that did not exist at present.

“So I think it’s a very positive opportunity for Aer Lingus and indeed for the economy and the country.”

She was speaking at a conference jointly hosted by the employers’ body Ibec and the Department of Justice in Dublin on Wednesday morning.