The Irish government has cut the flotation price of Aer Lingus to try to ensure that the sale of its national carrier in London and Dublin later this month goes smoothly.
Ireland's transport minister Martin Cullen said yesterday that the shares would be priced at between €2.10 and €2.70 (£1.40 and £1.80), giving Aer Lingus a stock market valuation of between €1.1bn and €1.3bn. Originally, the Irish government had hoped to sell the company for as much as €1.5bn.
At the middle of the range, the float will raise about €670m - of which about €170m will go back to the government. The bulk of the remaining net proceeds, estimated by the airline at €470m, will be used to finance the expansion and replacement of Aer Lingus's short-haul and long-haul fleet. Some €104m will be injected into the airline's staff pension fund.
The Aer Lingus sale marks the first flotation of an airline on the London Stock Exchange since the easyJet IPO six years ago and is going ahead despite opposition from trade unions. The sale comes at a critical time for the aviation industry, with fuel prices soaring and renewed concern over the terrorist threat. But analysts said the issue had been "priced to go". Aer Lingus will be valued on a similar basis as British Airways, although it is expected to trade at a premium when the shares list.
The Irish government will retain a stake of a little more than 30 per cent while Aer Lingus employees will own 12-13 per cent of the shares, meaning that somewhere between 55 and 60 per cent of the airline will be owned by outside investors.
Retail investors in Ireland and the UK will be able to take part in the offer but the minimum application will be for €10,000 worth of shares. The bulk of the shares will be sold to institutional investors in the UK, Ireland and the US.
Aer Lingus has been brought back from the brink, having been close to collapse after the 9/11 terrorist attacks. The airline has cut about a third of its workforce since then.
The government and its advisers, Allied Irish Bank and UBS, will set the final price on 27 September and dealings will begin in London and Dublin on 2 October.Reuse content