Ireland's Labour Party softens opposition to Aer Lingus sale

KILLARNEY, Ireland (Reuters) - A senior member of Ireland's junior coalition party on Saturday said opposition to the sale of the state's 25 percent stake in Aer Lingus AERL.I had softened in recent weeks and the party was likely to ultimately agree to the deal.

An Aer Lingus plane taxis before take off at Dublin airport January 27, 2015. REUTERS/Cathal McNaughton

Aer Lingus' board last month recommended that Ireland back a 1.36 billion euro (972.01 million pounds) bid for the airline from British Airways' owner International Consolidated Airlines Group (IAG) ICAG.L, but the deal has stalled due to political opposition spearheaded by the centre-left Labour Party.

A series of public appearances by IAG’s Irish chief executive Willie Walsh promising expansion at the airline, has increased support in the party, said former party leader Pat Rabbitte.

“I think the mood has changed,” Rabbitte told Reuters on the sidelines of the party’s annual conference. “I think it is very difficult to rebut the case that he made.”

Asked if he expected the deal to go ahead with Labour’s support, he said: “I think it will.”

The Irish government last week made a list of demands it said IAG must fulfil, including the extension of a guarantee of connections between Irish airports and London’s Heathrow for more than five years. IAG said it would consider the demands.

A group of seven deputies who represent constituencies close to Aer Lingus airports on Saturday submitted a motion to the Labour conference calling for the rejection of any sale unless certain conditions were met.

But while party figures earlier this month predicted a motion might demand a unilateral rejection, it listed relatively modest conditions: an independent valuation of the airline’s Heathrow slots, a guarantee of workers’ terms and a plan to support Cork and Shannon airports.

It asked for “meaningful, reliable and long term guarantees” of the Heathrow routes.

“We’re not trying to build a wall ... we’re just outlining the areas that need to be addressed,” said Joe Costello, the leader of the group, dubbed the “Aer Lingus Seven.”

In a straw poll of a dozen party members by Reuters, half said they were against the sale, most citing a preference for state control of the national airline.

But a majority said they thought opposition had weakened in the party in the past few weeks and only one said they thought a deal with IAG was not possible.

“I think its as good a deal as we’re going to get,” said George Cummins, a party member from Cork.

Editing by Robin Pomeroy