Aer Lingus share price rises 1.8% as airline confirms Etihad stake

AER LINGUS’s share price rose by 1.8 per cent yesterday as it confirmed that Abu Dhabi-based Etihad Airways had acquired a 2.987 per cent stake in the company and that the pair were in talks on developing a commercial partnership.

Etihad’s stakebuilding was revealed by The Irish Times yesterday, along with details of talks taking place between the airlines on a reciprocal code-sharing arrangement.

“Future discussions may explore additional commercial and cost opportunities to develop a closer working relationship in areas such as joint procurement,” Aer Lingus said yesterday.

It said it viewed the talks as a “natural progression of its successful Greenfield cost-reduction programme” but said there was “no certainty” as to the outcome.

Etihad has told Aer Lingus that it does not intend to increase its stake pending the outcome of the discussions.

In a statement yesterday, Etihad said the share purchase “reflected its desire to forge a commercial partnership” with Aer Lingus.

“Etihad Airways believes a possible partnership could produce significant commercial benefits for both airlines,” it added.

Etihad operates 10 flights a week from Abu Dhabi to Dublin and has carried more than 750,000 passengers between the capitals since it began flying in July 2007.

It has strategic code-share partnerships with 34 airlines around the world. It also owns 29 per cent of Air Berlin and 40 per cent of Air Seychelles.

Minister for Transport Leo Varadkar said Etihad’s stakebuilding in Aer Lingus was a “vote of confidence in the airline and the Irish economy”.

“The Government has decided that it is going to sell the 25 per cent stake in Aer Lingus, but it will only be sold at the right price and at the right time,” the Minister said.

“Etihad has expressed an interest already but we are not in any negotiations with them at present.”

Aer Lingus’s share price closed in Dublin yesterday at 99.3 cent – just below the €1 mark that the Government has indicated would be the minimum it would accept for its 134 million shares in the airline.

Ryanair, Aer Lingus’s biggest shareholder with a 29.8 per cent stake, said that the sale of the Government’s stake to Etihad or a financial investor would result in the Irish airline being “broken up and some or all of its Heathrow slots lost to Ireland”.

Ryanair also restated its position from last September that it would not bid for the Government’s stake if the State indicated that such a bid would be “unwelcome”.

The Michael O’Leary-led airline added that it would welcome another financially strong airline or investor acquiring the Government’s stake to help restore shareholder value.

In addition, Ryanair said it would not rule out selling its stake to whoever acquired the Government’s stake “subject to an acceptable agreement on price and maximising shareholder value”.