Tuesday 25 October 2016

Dan White: Willie Walsh's Aer Lingus offer is as good as it gets for airline staff

Willie Walsh
Willie Walsh

No-one can accuse IAG chief executive Willie Walsh of lacking patience. This week, five months after IAG first approached Aer Lingus, the Government finally agreed to sell its remaining 25.1pc stake in the airline to Mr Walsh's company.

After months of pulling and dragging, IAG - the product of the 2011 merger between BA and Spain's Iberia airline - agreed to give the Irish Government an effective veto on the disposal of Aer Lingus' take-off and landing slots at London's Heathrow Airport.

AIG also gave an undertaking to maintain Dublin, Shannon and Cork airports' Heathrow routes for at least seven years.

While Mr Walsh's improved terms were sufficient to convince the Government, there is still strong opposition to the takeover - and not only from the usual suspects such as the trade unions and some Labour TDs.


Senator and transport economist Sean Barrett - who before entering politics was renowned for his trenchant opposition to state involvement in the economy - has accused the Government of selling its Aer Lingus shareholding for a "paltry sum".

Since when is the €342m that the State will receive for its Aer Lingus shares been a paltry sum? Has Senator Barrett fallen into bad (political) company?

Opponents of the IAG deal seem to imagine that doing nothing is an option at Aer Lingus.

They seem to think that if the bid is rejected life can go on as before and that all of the jobs of those working at Aer Lingus, and their terms and conditions, will somehow be miraculously protected.

The reality, of course, is that nothing could be farther from the truth.

Europe's aviation market is consolidating at an extremely rapid rate.

The old model of each country having its own national flag carrier is quickly being displaced by a handful of mega-carriers.

Lufthansa is the biggest of these, and carried 106 million passengers last year. Ryanair is the second-biggest with 90 million followed by Air France with eight million, IAG with 77 million and EasyJet with 71 million.

By comparison, Aer Lingus carried 11 million passengers in 2014. Put another way, Lufthansa flies almost as many passengers in a month as Aer Lingus does in a year.

In recent years a slew of national flag carriers, including Swissair, Sabena of Belgium and Hungary's Malev, have disappeared.

So what would happen if the Government spurned IAG's offer? The first thing to bear in mind is that Aer Lingus is no longer a state-owned company - the State sold most of its shareholding in 2006. In fact, the State isn't even the biggest shareholder in Aer Lingus. Ryanair has that distinction with a 29.9pc stake.

It's not difficult to imagine IAG buying the Ryanair shareholding and launching a hostile bid for Aer Lingus if the Government kept saying "no".

Were that to happen, all of the previous promises about routes, slots and jobs would have been moot.

The truth of the matter is that Mr Walsh, himself a former Aer Lingus chief executive, held all of the best cards but chose not to embarrass the Government by saying so publicly.

He didn't have to, of course. Transport Minister Paschal Donohoe would have been well aware of the weakness of the Government's position. He played a bad hand well and is one of the few politicians to emerge from the Aer Lingus takeover with his reputation enhanced.


Despite what the many critics of the deal are claiming, this is as good as it gets for Aer Lingus.

The IAG takeover rescues it from Ryanair's clutches and, by allowing BA to feed passengers from Scotland and the north of England into Dublin, has the potential to greatly boost its highly profitable transatlantic traffic.

While nothing is certain in this world, the IAG takeover almost certainly represents the best opportunity to save as many of the almost 3,800 jobs at Aer Lingus as possible.

Going it alone is no longer an option. If Aer Lingus insists on flying solo, it will crash land sooner or later.

Promoted articles

Entertainment News