IAG is circling Aer Lingus

International Airlines Group (IAG), the owner of Iberia and British Airways, has made a third offer for Ireland’s flag carrier Aer Lingus.

International Airlines Group (IAG), the owner of Iberia and British Airways, has made a third offer for Ireland's flag carrier Aer Lingus, after being rebuffed twice since December. It's bidding €2.55 a share in cash, or €1.35bn up from an original offer of €2.30 a share.

Aer Lingus has indicated that it is inclined to accept, but two major stakeholders have yet to assent: Ryanair and the Irish government, which respectively hold 30% and 25% of the shares.

What the commentators said

Since it started amassing its stake eight years ago, it has made three failed bids for its Irish rival and become embroiled in endless legal fights. If it doesn't sell to IAG now, regulators will probably force it to cut its stake to 5% in a fire sale there are precious few potential bidders around at present. Besides, at this offer price, Ryanair would break even on its Aer Lingus purchase.

But what about the Irish government? A year before an election, the opposition has insisted that the deal is against the national interest, said James Moore in The Independent. Cue widespread eye-rolling in Britain: "airlines have used the attachment of governments to their businesses to pour billions of pounds, dollars, francs down the toilet". With "airlines evolving into giants" and fierce competition from the Gulf, it's not clear that Aer Lingus has a future on its own.

The upshot, reckoned The Guardian's Nils Pratley, is that the government will insist that the Heathrow-to-Ireland slots be preserved. IAG CEO Willie Walsh will want to do whatever he likes with the slots. "He won't get that, but there ought to be a sensible deal to be done."

Recommended

Stockmarkets shrug off turbulence
Stockmarkets

Stockmarkets shrug off turbulence

Stockmarkets have hit their first bout of turbulence of the year, but most are clinging onto January’s gains.
4 Feb 2021
The FTSE 100 has clawed back above 7,000 – how much higher can it go?
UK stockmarkets

The FTSE 100 has clawed back above 7,000 – how much higher can it go?

The FTSE 100 index has risen to over 7,000 for the first time in over a year – it now sits just above where it was in 1999. But its era of neglect cou…
19 Apr 2021
The MoneyWeek Podcast: how to not lose money to inflation and financial repression
Investment strategy

The MoneyWeek Podcast: how to not lose money to inflation and financial repression

Merryn talks to Peter Spiller of the Capital Gearing Trust about how he navigated the last extraordinary year; what he's buying now; and how he plans …
16 Apr 2021
UK mid-cap stocks look forward to life after lockdown
UK stockmarkets

UK mid-cap stocks look forward to life after lockdown

The FTSE 250 hit an all-time high at the end of last week, as investors look to a post-lockdown recovery.
16 Apr 2021

Most Popular

“Joke” cryptocurrency dogecoin goes to the moon. What’s going on?
Bitcoin

“Joke” cryptocurrency dogecoin goes to the moon. What’s going on?

Dogecoin – a cryptocurrency created as a joke – has risen by more than 9,000% this year alone. Saloni Sardana looks at how something that began as an …
19 Apr 2021
China owns a lot more gold than it’s letting on – and here’s why
Gold

China owns a lot more gold than it’s letting on – and here’s why

In a world awash with money-printing, a currency backed by gold would have great credibility. And China – with designs on the yuan becoming the world’…
21 Apr 2021
Why investment advice could be about to get a lot cheaper
Investment strategy

Why investment advice could be about to get a lot cheaper

Vanguard, the world’s second-biggest asset manager, is launching its own cut-price financial advice service. It’s something the industry badly needs, …
20 Apr 2021