Aer Lingus offer to include veto on sale of Heathrow slots

Barry O’Halloran and Mary Minihan

Business groups in Dublin, Cork and Shannon will share a legally binding veto with the Government over the sale of Aer Lingus's valuable landing rights in London's Heathrow Airport if International Consolidated Airlines Group (IAG) takes over the Irish flag carrier.

Senior executives from IAG, the owner of British Airways, will meet Government officials in coming days to discuss a series of guarantees that the group is prepared to give in relation to Aer Lingus's Heathrow rights and its independence should the €1.36 billion takeover bid succeed.

In an effort to convince the Coalition to part with the State’s 25.1 per cent stake in the airline, IAG has offered to give a legally binding commitment that Aer Lingus’s 23 landing and take-off slots at Heathrow cannot be sold without the Government’s agreement.

It is understood that, in a document given to Government representatives on Monday, IAG is proposing to extend the veto to the Dublin, Cork and Shannon chambers of commerce. All four would have to vote against any proposal to sell the slots in order to block it.

Taoiseach Enda Kenny said Tuesday morning that he has yet to examine the series of guarantees the IAG group is prepared to give in relation to the Heathrow rights and independence of Aer Lingus.

“We have to examine all the detail of that and the Minister [for Transport]will report to Government in due course,” Mr Kenny said, speaking on his way into Government Buildings ahead of the Cabinet meeting.

“I haven’t seen any more than what’s been referred to in the media.”

Business groups

It was suggested that Government and business groups would get “a special share” in the airline group that would allow them to enforce the veto. However, some sources suggested that the guarantee would not take this form, but would be “absolutely clearly and legally binding”.

IAG said in a statement that it is also prepared to guarantee that the slots would be used to service only Irish routes for five years. The group may be prepared to increase that to longer.

IAG's Irish chief executive, Willie Walsh, said the group's offers "would give the Irish Government an important role that they do not have today in securing the future of Aer Lingus".

Stock Exchange

When the airline was launched on the Irish Stock Exchange in 2006, the State retained its 25.1 per cent holding in order to allow the Government to block any attempt to sell the Heathrow slots.

The group claims that the terms it is offering go further than the safeguards that come with ownership of the 25 per cent stake.

The Heathrow slots are seen as vital to maintaining the Republic’s links to key markets for tourism, investment and exports as they offer connections to a large number of international destinations not served directly from Irish airports.

Coalition and Opposition politicians, lobby groups in Cork and Shannon and trade unionists representing Aer Lingus staff have been demanding the Government refuse to sell the State’s stake in order to protect these links.

IAG pledges failed to convince many of the proposed deal's opponents. Matt Staunton, national secretary of trade union Impact, which represents pilots, cabin crew and ground staff in Aer Lingus, said he remained unconvinced. Fianna Fáil transport spokesman Timmy Dooley said the pledge did not go far enough.

Clare County Council on Monday night unanimously rejected any commitment from IAG that does not explicitly guarantee Aer Lingus’s long-term commitment to services between Shannon Airport and London Heathrow.