Wednesday, 28 January 2015
Possible Sale of Aer Lingus: Statements
Much has been said in recent days about potential takeover offers for Aer Lingus. The issue has been a matter for debate since it was first announced in December that International Airlines Group, IAG, was considering making a takeover bid for Aer Lingus. While the matter has since moved on, we are still in the early stages of any process. Both Aer Lingus and IAG have made clear throughout that there is no certainty that any such offer will be made, nor is it clear what might be the terms of any such offer. Yesterday, the board of Aer Lingus announced that it had indicated to IAG that the financial terms of the latest proposal are at a level which it would be willing to recommend to shareholders, subject to being satisfied with the manner in which IAG proposes to address the interests of relevant parties.
At this point, I emphasise again that any takeover offer will be given very careful examination before the Government takes any decision on the issue. There are important considerations to be taken into account in addition to price. The issues that would have a potential impact of any sale include: connectivity to and from Ireland, including direct transatlantic services, and connectivity via Heathrow; competition in the air transport market; jobs in Irish aviation; and the Aer Lingus brand.
A steering group chaired by my Department and comprising representatives from the Departments of Finance and Public Expenditure and Reform, and NewERA, has been considering this matter since the first approach was made in December. The steering group is examining issues related to a potential offer for the State's shareholding in Aer Lingus. NewERA has procured external financial and legal advisers to help the steering group in its work. The group will report back to me shortly on the key issues and the matter will be considered further by the Government, if necessary, before any final decision is taken.
While no formal offer has been made, Aer Lingus is still in an offer period under the rules of the Irish Takeover Panel. For this reason, the rules regarding communications by all parties, including shareholders, in such a period apply. Aer Lingus's shares are still being trading on the Stock Exchange and great care needs to be taken in comments made by me and my Government colleagues. If a formal takeover offer is made for the company, all relevant matters relating to that offer will be placed in the public domain as part of the offer. At this stage, however, I can say very little new on the matter.
Yesterday, I briefed my Cabinet colleagues on the approaches that have been made to the board of Aer Lingus and issued a press statement afterwards. In a statement also issued yesterday, IAG recognised the importance of direct air services and air route connectivity for investment and tourism in Ireland, and stated its intention to engage with the Government on these matters. Representatives from the steering group are having a preliminary meeting with IAG today to begin that process. However, if any confidential information is shared by IAG during these contacts, the steering group is legally obliged to keep such information confidential.
The State owns 25.1% and Ryanair owns 29.8% of the issued share capital in Aer Lingus. A statement issued by the board of Aer Lingus earlier this week indicated that the revised proposal from IAG is conditional on, among other things, irrevocable commitments from Ryanair and the Government to accept the offer. While such conditions may be waived by IAG at any stage, they are an indication that the company, in advance of making any formal offer to Aer Lingus shareholders, is seeking the prior agreement of the Government and Ryanair to accept such an offer. As the State's 25.1% shareholding cannot be compulsorily acquired, it is for Government to decide, having examined the matter carefully, whether to accept or reject any offer. Since no formal offer has been made, there is no deadline by which any such decision needs to be made.
Section 3(5) of the Aer Lingus Act 2004 also provides that the Minister for Finance, in whose name the State's shareholding is held, may not dispose of any shares in Aer Lingus without the general principles of the disposal being laid before and approved by Dáil Éireann. Approval was given by the Dáil in 2006 for the general principles of the Aer Lingus initial public offering. However, these principles stated that the State would retain at least 25.1% of the shares. On that basis, any decision to reduce the State's current shareholding would need further Dáil approval.