BA owner tables bid for Aer Lingus after Irish government agrees to sell stake

British Airways owner International Consolidated Airlines Group last night formally tabled a €1.4bn (£1bn) bid for the Irish flag carrier Aer Lingus.

The agreed offer comes after the Irish government cleared the way for the deal yesterday, approving the sale of the state’s 25 per cent in Aer Lingus to IAG.

The terms of the offer, which brings a bid battle that began before Christmas towards an end, will see Aer Lingus investors receive €2.55 cash for each of their shares.

While bosses at the airline had backed the sale, unions and opposition parties had expressed concerns about job losses.

The Taoiseach Enda Kenny said some previous approaches by IAG were dismissed on the basis there were no “cast iron guarantees” on demands over employment, growth and connectivity.

IAG has now agreed that Aer Lingus will hold its existing slots at London Heathrow, and will operate its current daily winter and summer scheduled frequencies between Heathrow and Dublin, Cork and Shannon for at least seven years after the acquisition.

Other terms include Aer Lingus operating its scheduled international air transport passenger services under the Aer Lingus brand, and maintaining Aer Lingus as its registered name and its head office in the Republic of Ireland.

Willie Walsh, the chief executive of IAG said: “Acquiring Aer Lingus would add a fourth competitive, cost-effective airline to IAG, enabling us to develop our network using Dublin as a hub between the UK, continental Europe and North America, generating additional financial value for our shareholders.”

Colm Barrington, chairman of Aer Lingus added: “This is a compelling transaction for Aer Lingus, its shareholders, its employees, its customers and for Ireland.”

Ryanair, which has a 29.8 per cent stake in Aer Lingus dating back to failed attempts to take over the airline itself, has not confirmed whether it would accept an offer by IAG for its stake.

The airline, which has been ordered to sell down the stake by UK competition regulators, yesterday said that the board would consider any offer from IAG on its merits.