Aer Lingus: State to keep veto over Heathrow slots

The State is to get a special share in Aer Lingus safeguarding the airline’s slots at Heathrow, in return for backing a €1.4 billion takeover bid for it.

The Government is recommending the sale of the State’s 25.1 per cent stake in Aer Lingus to International Consolidated Airlines Group’s (IAG) and is set to put a motion to the Dáil on Wednesday, followed by a vote on Thursday.

However, Opposition parties are opposing the deal and the two Aer Lingus unions, Impact and Sipptu, have both come out against it, despite a late assurance form Aer Lingus on compulsory redundancy and outsourcing.

Under the terms of IAG’s offer, the Minister for Finance will retain a special “B share” in Aer Lingus which will allow changes to connectivity to be made only with the consent of the government of the day.

A legally binding commitment has also been provided to protect the Aer Lingus brand, as well as ensuring its headquarters are based in Ireland.

The B share will underpin legally binding guarantees on all the airline’s existing take-off and landing rights at Heathrow Airport for an “unlimited” period of time. The current daily services between the London hub and Dublin, Cork and Shannon will be maintained for “at least” seven years, with the final two years conditional on airport charges not increasing beyond specified levels.

The Government believes Aer Lingus’s Heathrow slots are critical to maintaining links that are vital to the Republic’s foreign trade and tourism. Minister for Transport Paschal Donohoe said the new share “will be held by the Minister for Finance indefinitely because it is needed to oversee the guarantee that we have in relation to the indefinite commitment and guarantee and slot retention. We are confident that is legally robust and we have already received indications that from an operation point of view that it would not be opposed.”

The group of Labour TDs who have had concerns about the deal are understood to be broadly happy with the proposals.

However, Clare Labour deputy Michael McNamara, whose primary concerns are around connectivity, said he wanted to see the details of the deal, and would vote against the sale in the Dáil if he was not satisfied with it.

IAG is forwarding its offer to the European Commission’s competition regulators . Brussels will have to approve any deal before it can go ahead. Aer Lingus shareholders will receive full details of the offer within 28 days.

Ryanair, owner of 29.8 per cent of the airline, is the largest shareholder and its acceptance is needed for the sale to go through. It has said that its board will review any offer it receives on its merits.

The €350 million that the State will earn from the sale will be used for investment in other transport projects, as well as in areas such as broadband.

Fianna Fáil transport spokesman Timmy Dooley said the Government was making the wrong decision. “An independent Aer Lingus could achieve continued and significant growth over the years ahead through strategic alliances and organic growth”.

Sinn Féin’s Dessie Ellis said he has “grave concerns” about the effect the deal would have on Ireland’s connectivity into the future, as well as the threat it posed to workers.

Despite late assurances by Aer Lingus that it did not envisage compulsory redundancies or outsourcing, the company’s two main unions will opose the deal.

Siptu said it would “vigorously oppose the Government plan” due to the failure of the company to provide commitments to workers that it would not impose compulsory redundancies or the outsourcing of jobs. It said it would call on TDs to vote against the Dail motion.

The Impact trade union said it maintained the view that the proposed takeover was “bad for jobs, for Aer Lingus workers and for Ireland’s connectivity and economic development”.