James Moore: Dublin faces a Hobson's choice over Willie Walsh's third Aer Lingus offer

Outlook: The only stumbling block that remains is the Irish government

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By common consensus, the €1.36bn (£1bn) that Willie Walsh’s International Airlines Group (IAG) proposes to pony up for the Irish flag carrier Aer Lingus is, at the third attempt, about right. Certainly Ryanair, one of the two major potential impediments to the deal, would be crazy not to say yes. Handing to a rival an asset that he has coveted for years might be tough for Ryanair’s colourful chief executive, Michael O’Leary. But if he has any sense he will realise he is the one surefire winner from this deal, assuming it goes through, and he will sign on the dotted line.

His resurgent Ryanair has to cut its stake to 5 per cent to satisfy EU watchdogs. Thanks to his countryman Mr Walsh, he will be able to do so at a tasty profit. The funds thus realised could either be returned to shareholders or spent on further ways of competing with his rivals and driving them into the ground. Or both.

The only stumbling block that remains, then, is the Irish government. For Dublin, the decision is much more finely balanced. With a year to go before Ireland’s next general election, the opposition Fianna Fail party has scented blood and sought to make political capital from the ruling Fianna Gael-led coalition’s dilemma by insisting that the deal is against the national interest.

The usual reaction on this side of the Irish Sea, where laissez faire is an article of faith when it comes to deals, is for people to start rolling their eyes at this point (with good reason, when it comes to politicians wrapping themselves in the flags of their national carriers, if nothing else). Airlines have used the attachment of governments to their businesses to pour billions of pounds, dollars, francs (delete as appropriate) down the toilet. However, given its geographic position and its desire to keep its Western regions, in particular, connected to the rest of the world, there is a certain amount of justification for Ireland’s twitchiness in this case.

Unfortunately, with airlines evolving into giants, amid strong competition from the Gulf, and the need to cut costs and secure precious take-off and landing slots, does Aer Lingus, even a revitalised Aer Lingus, have a viable future on its own? As Flybe has just demonstrated with another profits warning, running a small airline is tough at the best of times, let alone in the midst of intense competitive turbulence. The Irish government has spent a fortune bailing out its banks. It can ill afford to be pouring money into another black hole. Its choice is one that an Englishman, Thomas Hobson, would have been rather familiar with.