We might still get to see the clash of the Irish airline titans


James Moore
Thursday 28 May 2015 01:34

Outlook Much of the analysis of the attempt by International Airlines Group (IAG) to add Aer Lingus to a stable that includes BA and Iberian has focused on the business side.

IAG has a problem in that Heathrow is full up. Getting its hands on Aer Lingus would allow it to route transatlantic flights from UK regional airports through Ireland rather than Heathrow. That third runway that’s creating such a fuss? The deal would allow IAG to develops it in Dublin and Shannon. Some of its prized Heathrow slots could then be used for more profitable purposes (China, anyone?).

There are legitimate reasons for Ireland’s politicians to be concerned. But they needn’t worry. IAG’s chief executive Willie Walsh wants to develop and expand IAG’s operations in his homeland. The sops he’s offered to get the Irish Government to sign up weren’t all that painful to him to offer.

What’s really interesting about the deal, however, has nothing to do with financial or business considerations: Mr Walsh started his career as a cadet pilot at Aer Lingus. If he can pull this off, the local boy made good will be able to ride into its HQ as the conquering hero.

Unfortunately, standing against him is the joker in the pack: Ryanair, which owns 30 per cent of Lingus. It is led by that other titan of Irish aviation, Michael O’Leary, the Johnny Rotten of the air travel industry. His attempts to get his hands on the same prize that Mr Walsh wants were frustrated by politicians and regulators despite his offering sops of his own.

While competition watchdogs have demanded that Ryanair sell down its stake to 5 per cent, Mr O’Leary still has a powerful hand because the deal on the table is conditional on his accepting it.

A no-brainer? Ryanair certainly stands to net a huge windfall if it says yes. That could help fund share buy-backs, dividends, etc.

But will that be enough for Mr O’Leary, who, as I noted this week, has gone very quiet of late as part of his re-casting Ryanair in a new, cuddly guise?

Mr Walsh is adamant that he won’t raise his offer, but those who’ve been enjoying this high-stakes soap opera can be reassured: the drama isn’t over. And Mr O’Leary might be about to make some noise.

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