Incoming Aer Lingus chief says IAG deal would accelerate growth

Aer Lingus will grow more slowly and face higher risks if it opts to remain independent instead of accepting the €1.36 billion takeover offer from International Consolidated Airlines Group (IAG), according to its incoming chief executive.

Stephen Kavanagh, who was this week named as the airline's next chief executive, told TDs and Senators yesterday Aer Lingus "would survive" if it did not accept IAG's €2.55-a-share offer for the company.

However, he stressed that becoming part of the group that owns British Airways (BA), Iberia and Vueling would accelerate the growth Aer Lingus is experiencing on its long-haul services, where it is cashing in on Dublin's potential to act as a hub for north Atlantic traffic by bringing in transfer passengers from other European airports.

Mr Kavanagh pointed out that if a deal is done, four operators – Aer Lingus itself, BA, Iberia and IAG's partner, American Airlines – would sell seats on the Irish carrier's services.

He added that Aer Lingus would still have the potential to grow the transatlantic market if the sale does not go through. “But the opportunities will be less and the risks will be higher,” he said.

Mr Kavanagh told the Oireachtas Joint Committee on Transport and Communications that Shannon and Cork airports would also benefit from a deal, as all members of the Oneworld Alliance, an airline partnership of which IAG is a part, would sell tickets on all Aer Lingus services.

“You would simply have an ability to reach more prospective customers more cost effectively,” he said.

Aer Lingus chairman Colm Barrington told the committee 75 million people fly between Europe and North America every year. The Irish carrier has a 2 per cent share of that market.

“Growing our share from 2 per cent to 5 per cent would have huge positive benefits for Aer Lingus, Irish airports and their employees,” he said.

200 extra jobs

Mr Barrington estimated a deal could result in up to 200 extra jobs being created within a year if two extra long-haul aircraft were added to the airline’s fleet.

The Aer Lingus representatives were the latest in a series of witnesses to appear before the committee since the airline’s board said it was prepared to recommend IAG’s proposed offer to shareholders.

Many of the committee’s members are opposed to the Government selling the State’s 25.1 per cent stake in Aer Lingus, as they fear that this would ultimately lead to the loss of the Irish airline’s valuable access rights at London’s Heathrow Airport.

The slots are seen as critical to the Republic’s links with markets for tourism, investment and exports, and to the viability of Cork and Shannon airports.