IAG raises Aer Lingus bid to €1.3bn, or €2.50 per share

IAG increased its bid for Irish national flag carrier Aer Lingus Group Plc to €1.3 billion (£971 million), or €2.50 per share. This is the Anglo-Spanish company’s third approach.

IAG (International Consolidated Airlines Group S.A.), which is headquartered in London, UK, and has its registered office in Madrid, Spain, owns British Airways, Iberia and Vueling.

Aer Lingus rejected two previous offers, the last one made early in January for €2.40 per share. The first bid, made in early December, 2014, offered €2.30 per share. The Irish airline’s responses to both proposals were that they underestimated the true value of the business.

IAG is seeking ways of gaining more take-off and landing slots at London Heathrow airport, its home base. If it manages to takeover Aer Lingus, which is Heathrow’s fourth busiest airline, after BA, Lufthansa and Virgin Atlantic, it would have more than half of all available slots.

Aer Lingus

Analysts expect Aer Lingus to respond formally to the improved offer on Monday.

However, Ryanair, which owns a 29.9% stake in Aer Lingus and has unsuccessfully tried to buy the airline, would need to approve the transaction. British competition authorities have told Ryanair to sell down its Aer Lingus stake.

Any deal would also require the approval of Ireland’s government, which owns 25% of the Dublin-based carrier. The Financial Times quoted Irish opposition transport spokesman Timmy Dooley who urged the government to resist selling its stake. He believes an acquisition by IAG could significantly undermine the status of Dublin, Shannon and Cork airports. “Dumping this stock in order to raise some short-term cash to fund election promises would be a major mistake that the travelling public will quickly regret,” he said.

Sky News, which broke the news about AIG’s third improved offer, said the multinational airline holding company had submitted an improved all-cash proposal within the last two days, which directors of Aer Lingus had met to discuss.

Unnamed insiders told Sky News that Aer Lingus directors discussed the proposal on Friday with Goldman Sachs, their banking advisers.

Willie Walsh, IAG’s chief executive, started off as an Aer Lingus pilot. He went on to become the Irish airline’s chief, before heading BA in 2005.

About Aer Lingus Group plc

Aer Lingus, formed in 1936, is Ireland’s national flag carrier. It operates a fleet of 47 airplanes, comprising mostly of Airbus aircraft, and flies to 77 destinations in Europe, North America, and North Africa.

It has operating bases at Gatwick, Heathrow, Belfast-City, Cork, and Dublin airports.

It is Ireland’s oldest existing airline, and the country’s second-largest, after Ryanair.

The company employs more than 3,600 workers. The name “Aer Lingus” is an Anglicisation of the Irish Aer Loingeas, which means “air fleet”.

Under Chief Executive Christoph Mueller, the airline posted its best summer trading performance since the financial crisis. Its operating profits rose 19% to €112.9m in the quarter ending in September, during which it carried nearly one-quarter more long-haul passengers compared to the same quarter in 2013. Revenue per seat also increased.

The airline is set to launch a Dublin-to-Washington service in the first half of this year. It also plans to increase the number of transatlantic routes.

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