Aer Lingus snub to start BA dogfight
A TAKEOVER dogfight is looming after Ireland’s Aer Lingus rejected an approach from British Airways owner IAG.
IAG chief executive Willie Walsh started off as a pilot at Aer Lingus before moving to BA
A deal would give IAG control over the Irish carrier’s lucrative landing slots at London’s Heathrow airport but is likely to face strong opposition across the Irish Sea. Shares in Dublin-listed Aer Lingus surged as much as 14 per cent as speculation of a bid swept the stock market yesterday.
But they later fell back to close unchanged after the two companies issued statements in which they said the Irish group had rebuffed a possible offer from its rival. IAG, which owns BA and Iberia, issued a terse announcement in which it confirmed its proposal had been rejected by the board of Aer Lingus.
It also said there was no certainty of any further proposal or a formal offer. Aer Lingus said a “preliminary, highly conditional and non-binding approach” from IAG was received last Sunday.
It added its board reviewed the proposal and rejected it two days later, believing that it “fundamentally undervalues Aer Lingus and its attractive prospects”. IAG chief executive Willie Walsh knows Aer Lingus well having started there as a pilot, and working his way up to chief executive before his move to BA.
Buying Aer Lingus would give BA more slots at Heathrow where Aer Lingus is the third largest airline. However an agreement faces many hurdles including concerns it could reduce competition on routes where the two airlines currently overlap.
Any offer from BA is likely to be politically sensitive in the Irish republic where the government owns 25 per cent of Aer Lingus. And it would also require the backing of budget airline Ryanair, which owns 29.9 per cent after making three failed takeover attempts itself. Shares in Aer Lingus closed unchanged at €1.99, while IAG was 20p higher at 463½p.