International Airlines Group (IAG), the owner of Iberia and British Airways, has made a third offer for Ireland’s flag carrier Aer Lingus, after being rebuffed twice since December. It’s bidding €2.55 a share in cash, or €1.35bn – up from an original offer of €2.30 a share.
Aer Lingus has indicated that it is inclined to accept, but two major stakeholders have yet to assent: Ryanair and the Irish government, which respectively hold 30% and 25% of the shares.
What the commentators said
Aer Lingus wouldn’t come cheap for IAG, said Lex in the FT, but 17 times earnings looks reasonable for 23 slots at Heathrow. These “do not come up often”. Ryanair, for all its bluster about considering another tilt at Aer Lingus, looks likely to sell, said Alistair Osborne in The Times.
Since it started amassing its stake eight years ago, it has made three failed bids for its Irish rival and become embroiled in endless legal fights. If it doesn’t sell to IAG now, regulators will probably force it to cut its stake to 5% in a fire sale – there are precious few potential bidders around at present. Besides, at this offer price, Ryanair would break even on its Aer Lingus purchase.
But what about the Irish government? A year before an election, the opposition has insisted that the deal is against the national interest, said James Moore in The Independent. Cue widespread eye-rolling in Britain: “airlines have used the attachment of governments to their businesses to pour billions of pounds, dollars, francs… down the toilet”. With “airlines evolving into giants” and fierce competition from the Gulf, it’s not clear that Aer Lingus has a future on its own.
The upshot, reckoned The Guardian’s Nils Pratley, is that the government will insist that the Heathrow-to-Ireland slots be preserved. IAG CEO Willie Walsh will want to do whatever he likes with the slots. “He won’t get that, but there ought to be a sensible deal to be done.”