Aer Lingus IPO on backburner, BA may be interested in takeover

Airline Industry Information, June 4, 2001

AIRLINE INDUSTRY INFORMATION-(C)1997-2001 M2 COMMUNICATIONS LTD

The Irish government is considering selling Aer Lingus, the national carrier, to another airline.

A spokesperson for the Department of Public Enterprise stated on 1 June that the planned flotation of the airline was looking increasingly difficult due to industrial action, the current market situation and legal action against the CEO, and that sale to a rival was probably more likely, reported Reuters.

Public Enterprise Minister Mary O'Rourke told state broadcaster RTE that a flotation was currently off the agenda 'because the business climate for any flotation is not a very good one, particularly for airlines.' O'Rourke also said that Aer Lingus was in for a tough year and an uncertain future with profits expected to be down this year. O'Rourke is planning to meet with staff union representatives shortly about a potential trade sale.

In related news, UK newspaper The Sunday Times reported yesterday (3 June) that British Airways is considering a GBP300m takeover of Aer Lingus.

The newspaper suggested that BA chief executive Rod Eddington was aware that the Irish government was going to pull the IPO about a week before the announcement, and that Eddington was considering either outright control or a minority stake. The two carriers code-share on flights between the UK and Ireland, and are both members of the Oneworld airline alliance.

A previous takeover bid made by former BA chief executive Bob Ayling in 1998 was rejected, as was a 1999 offer for a 10% stake.

A spokesperson for BA told Reuters however that the Sunday Times report was 'all speculation and rumour.'

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