Donohoe asks IAG to improve commitments in Aer Lingus bid

The Government has issued its most positive response to date to the IAG takeover bid for Aer Lingus, but said the commitments offered in the proposals do not go far enough.

In a statement, Minister for Transport Paschal Donohoe said that both IAG and Aer Lingus had made positive statements about overall employment prospects at the airline, "including some encouraging information in respect of the number of new jobs for pilots, engineers and ground staff."

Mr Donohoe said, however, that IAG has also indicated there would be rationalisation as a result of a takeover.

“Clarity on the overall employment prospects on the basis of the proposals received is still needed, with particular reference to the timeframe within which net additional employment would be created,” Mr Donohoe said.

Mr Donohoe said that the Government needs firm commitments and details on matters such as the airline’s plans for expansion.

“Aer Lingus sees the potential for its planned growth in transatlantic traffic to be significantly accelerated and for new US destinations to be added to its network.”

Mr Donohoe said that IAG indicated that it would look at other opportunities at Cork and Shannon airports and that it could enhance the Knock-Gatwick service through the airline's relationship with British Airways at Gatwick.

He also said IAG was proposing to offer legally binding, permanent commitments on the Heathrow slots and term-based commitments on routes.

“However, the commitment in relation to routes is for five years. The Government requires a longer period,” Mr Donohoe said.

The Minister said the nature and acceptability of oversight measures on the Heathrow slots and routes also needed to be confirmed.

The Minister said IAG’s most recent proposal valued each Aer Lingus share at €2.55 and this was being evaluated.

“The information and commitments that have been set out to date do not at present provide a basis on which the Government could give an irrevocable commitment to accept an offer to dispose of its shares, should one be made by IAG.

“In line with stated policy, the Government remains open to considering any improved proposal which IAG may bring to the steering group,” said Mr Donohoe.

Minister for Transport Paschal Donohoe briefed his Cabinet colleagues on the latest IAG proposals earlier today .

Cabinet support

Speaking afterwards, Mr Donohoe said any further developments are now a matter for IAG. He said that all Ministers at today’s Cabinet meeting supported his position but declined to put a timeframe on when IAG could return with a counter-offer.

He also declined to specify the length of the guarantee the Government is seeking on the Heathrow slots.

“The IAG made three proposed bids in relation to the Aer Lingus company. On foot of their third bid coming in, I met IAG in Dublin a number of weeks ago. In that meeting, I made clear to them I would not be in a position to bring forward that bid to the Cabinet to look for approval.

“I also said I needed [greater clarity on the] proposals and further information in certain areas, which I have now updated the Cabinet on. We remain open through our steering group to any further policy proposals IAG may bring.”

Varadkar statement

Minister for Health Leo Varadkar had said earlier that the Government's decision on the sale of Aer Lingus should not be based on political concerns,

Mr Varadkar was speaking ahead of today’s press conference by Minister for Transport Paschal Donohoe on the IAG proposals.

Mr Varadkar said he looked forward to hearing Minister for Transport Paschal Donohoe brief colleagues on the latest developments on the subject at this morning’s Cabinet meeting.

“Whatever decision is made it shouldn’t be made on political concerns or constituency concerns, and I say that as somebody who represents a north Dublin constituency,” Mr Varadkar said.

“It should be based on the best interests of the country and the company.”