State decision on Aer Lingus may be made by early April

Kavanagh tells aviation forum, ‘There is a timeline and an end is in sight’

The Government could decide on a sale of the State's 25.1 per cent stake in Aer Lingus early next month, according to the flag carrier's chief executive, Stephen Kavanagh.

Aer Lingus's board and management have already backed IAG's €1.36 billion proposed offer, which is conditional on the State and Ryanair agreeing to sell their holdings in the company.

Mr Kavanagh suggested the Government could make a decision on the State’s stake shortly after Easter, which falls on the first weekend of April.

"I am pretty comfortable that there is now a timeline and that an end is in sight," he said, before taking part in the Capa Centre for Aviation annual chief executive's conference in Powerscourt Hotel in Wicklow yesterday.

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He added the indications were the Government could reach some conclusion in the next two to three weeks but stressed he could not predict what the decision might be.

No presumptions

“I’m not confident, but the opportunity we believe is clear. We genuinely maintain the position that it [a sale to IAG] is positive for all stakeholders,” he said.

“In that context we are hopeful that the right decisions are taken, but we’re not in any way complacent or making any presumptions.”

It emerged last week that Etihad Airways, holder of almost 5 per cent of Aer Lingus, will probably sell its stake if the Government backs the IAG offer. James Hogan, chief executive of the Gulf-based airline, reiterated this in an interview with the Financial Times.

“Our investment in Aer Lingus has been a sound one and we are heading for a great return if the IAG bid is approved by the Irish Government,” he told the newspaper.

Etihad first invested in Aer Lingus three years ago, buying 3 per cent of the company.

It raised this stake to 4.9 per cent last year, making it the third-largest shareholder.

Mr Hogan also told the Financial Times Etihad had hoped to gain greater leverage from its Aer Lingus investment.

“While we have a good relationship, [Aer Lingus] had its model which was very focused on transatlantic,” he said.

“We were keen to have Aer Lingus flying to Abu Dhabi.”

Aer Lingus is meanwhile keen to see the UK's Competition and Markets Authority (CMA) go ahead with a forced sale of most of Ryanair's 29.8 per cent stake in the airline.

Ryanair is continuing with a legal challenge to the competition regulator’s 2014 ruling that it cut the Aer Lingus stake to 5 per cent.

Mr Kavanagh stressed that Aer Lingus wants some sort of control over any sale of those shares. However, the CMA has already said that this would not be appropriate.

Minister for Transport, Tourism and Sport Paschal Donohoe, who opened the conference, said that talks between the Government and IAG are continuing.

“We have had a lot of contact with IAG, it’s contact that they initiated. The contact has focused on areas that affect them as a company and us as a country,” he noted.

Jobs and slots

The Minister refused to get into detail on the discussions but said that they cover areas such as jobs, Aer Lingus’s valuable landing and take-off rights at London’s Heathrow airport and flight connections in and out of the Republic.

Earlier, Mr Donohoe told the conference, whose audience included representatives of most of the world’s leading airlines and aviation-related businesses, that the Republic’s market for air services enjoys high levels of competition and connectivity.

He stressed that maintaining this is a key issue for the Government in its talks with IAG on the future of the State’s share in Aer Lingus.

Barry O'Halloran

Barry O'Halloran

Barry O’Halloran covers energy, construction, insolvency, and gaming and betting, among other areas