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IAG's CEO Walsh says Aer Lingus might not survive on its own
February 12, 2015 / 10:52 AM / 3 years ago

IAG's CEO Walsh says Aer Lingus might not survive on its own

DUBLIN (Reuters) - The chief executive of British Airways owner IAG (ICAG.L) told Irish politicians on Thursday that Aer Lingus AERL.I would struggle to survive if they do not back its bid for the former flag carrier.

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

Dubliner Willie Walsh, who began his career as an Aer Lingus pilot and had become the airline’s chief executive before he moved to British Airways 10 years ago, was back this week campaigning to win over sceptical MPs to IAG’s 1.36 billion-euro offer, which already has the qualified backing of Aer Lingus’s board.

The board’s recommendation is subject to the Irish state selling its 25 percent holding and, with tough elections just a year away, resistance has been building among government MPs whom Walsh faced at a parliamentary hearing on Thursday, telling them his intentions were “completely positive”.

“I spent 25 years working there, I love the company but I have been very clear for a long time, Aer Lingus has a tough job ahead of them trying to survive - survive, never mind grow - in an industry that is becoming more consolidated,” Walsh told the Newstalk radio station ahead of the committee hearing.

“To truly exploit the opportunity that exists, it needs to be part of a bigger group.”

In one of three newspaper interviews published earlier on Thursday, part of a day-long charm offensive, Walsh said he was “nowhere near” walking away from its bid. Speaking to another radio station, he said he believed the government is still open to the deal despite the pressure.

He faced concern rather than hostility from the 26-member committee and afterwards two members of Prime Minister Enda Kenny’s Fine Gael party who Reuters spoke to said they were open to persuasion following a “positive” presentation.

Opposition is firmer within the centre-left junior coalition Labour party, which is particularly struggling in opinion polls.

“Despite an impressive presentation, there really was very little further substance. I wouldn’t be convinced to date of what’s before us,” Labour’s Joe Costello, from a constituency near Dublin airport, told Reuters.

Aer Lingus’s main trade unions IMPACT and SIPTU, which are affiliated to Labour, said little had changed.

Aer Lingus’s shares, trading 13 percent below the IAG offer price of 2.55 euros on worries over the political opposition, closed 3.1 percent higher at 2.23.

In a bid to soothe concerns, IAG said last week that it will maintain for at least five years key landing and take-off rights for its Irish routes at London Heathrow. Many MPs asked Walsh to stretch that to 10 or 15 years.

Walsh, speaking publicly on the bid for the first time, said there would be a small number of job losses in administrative roles but plans to expand Aer Lingus’s fleet would more than compensate with positions for pilots, cabin crew and engineers.

The five-year Heathrow guarantee was final, he said. Asked if it could seek to buy the remainder of the airline if the government rejects the offer, Walsh said: “We’ll wait and see.”

Editing by Greg Mahlich and Elaine Hardcastle

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