IAG share price dips amid Aer Lingus acquisition talk

on Mar 9, 2015
Updated: Oct 21, 2019
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International Consolidated Airlines Grp (LON:IAG) shares were down 0.18 percent at 549.00p as of 15:30 GMT, pressured by delays in talks to acquire Ireland’s Aer Lingus.

IAG, which owns British Airways and Iberia, made an offer of €2.55 per share on January 26, a 7.6 percent premium to Aer Lingus’s share price at the time. The board of the Irish carrier backed the deal, saying it was “in the best interests of Aer Lingus’ shareholders”.
“If anybody is really interested in connectivity and jobs regarding Aer Lingus they should support this deal wholeheartedly because it’s fantastic for connectivity and it’s very, very good for jobs,” Colm Barrington, chairman at Air Lingus, told RTÉ.

However, the deal is currently blocked by unions, which demand guarantees from IAG that Aer Lingus will keep its landing slots at Heathrow. Irish Minister for Transport Pascal Donohoe, who represents Dublin’s 25 percent stake, also stressed that the government will need to see assurances that its carrier will keep the key slots before a deal is concluded. He did, however, also say that it was in the best interests of all parties to have the matter settled within weeks.

Another key issue analysts have pointed to is Ryanair’s involvement. The discount airliner currently has a 29.82 percent interest in Aer Lingus, and some have speculated that Ryanair has demanded slots at Heathrow for a deal to proceed. Barrington declined to comment, saying “that’s between Ryanair and IAG”.
Just last month Ryanair lost a challenge to the Competition Appeal Tribunal’s judgment, which ruled that Ryanair’s stake in Aer Lingus was anit-competitive, and required it to sell-down its interest from 29.82 percent to five percent.
The takeover saga comes just as Aer Lingus reported improving results in its 2014 annual report. Revenue climbed 9.2 percent to €1.56 billion, while operating profit had added 17.8 percent to €72.0 million.
Meanwhile, IAG also saw its 2014 results improving on the previous year. Revenue was up 9.6 percent at €17.83 billion, while profit leaped 80.5 percent to €1.39 billion.
As of 16:02 GMT, Monday, 09 March, International Consolidated Airlines Grp share price is 548.75p.

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