British Airways’s owner in £1billion bid for Aer Lingus

BRITISH AIRWAYS owner IAG has made a third takeover approach for Ireland’s Aer Lingus, making an offer valuing the airline at £1billion.

IAG also owns Spanish carrier Iberia and is understood to have offered 2.50 euros a share (£1.87) in a cash bid for the Irish carrier.

The offer is sufficiently high for formal talks to begin shortly, reckon industry sources. Its previous two offers were rejected, including one earlier this month for 2.40 euros a share and one before Christmas for 2.30 euros a share.

International Consolidated Airlines Group (IAG), is run by chief executive Willie Walsh, a former pilot and ex-boss of Aer Lingus. The Irish airline’s chief executive is Christoph Muller.

Both previous offers were rejected by Aer Lingus on the grounds that there were undisclosed conditions attached while the company also said they ‘undervalued’ the airline.

It is not clear whether there are conditions attached to this latest approach. IAG and Aer Lingus both declined to comment.

Acquiring Aer Lingus would give IAG access to the airline’s valuable take off and landing ‘slots’ at Heathrow airport. The airport is British Airways’ home base and a crucial European hub providing access to destinations across the globe.

The airport is operating at nearly full capacity which prevents BA adding more flights without acquiring access to another airline’s slots. A merger between the two airlines would create a group with almost half the available slots at the airport. A successful bid would also allow Walsh to increase the Irish airline’s profitability by drawing on assets within IAG to reduce costs.

Any successful bid for Aer Lingus would need the backing of Ryanair, run by Michael O’Leary, its rival Irish airline. Ryanair holds a 29.9 per cent stake in Aer Lingus and has tried, unsuccessfully, to take over the airline in bids going back to 2006. Its offers have been stymied by regulatory concerns.

Ryanair, which also declined to comment, has indicated that it would be prepared to consider a bid between 2.50 and 2.70 euros a share.The other major backer is the Irish government which owns 25 per cent.

Directors of the Dublin-based carrier are understood to have met on Friday to discuss the offer and there are a suggestions that a formal statement may be released on Monday.