BA’s Walsh bids to go back to his roots with takeover attempt of Aer Lingus

Irishman Willie Walsh's latest gambit to take over Aer Lingus is an audacious attempt to buy the airline where he began his career in aviation as a 17 year old.
The former pilot took aptitude tests for a flying career by chance but progressed to the very top of the Irish flag carrier in October 2001 when he was elevated from chief operating office to chief executive.
Staff, however, heaved a sigh of relief when the cost-cutting executive, nicknamed "slasher", left the Dublin airline for a bigger job across the Irish Sea after taking 30 per cent out of the airline's costs.
Mr Walsh took over the reins of British Airways as the chief executive in October 2005.
He oversaw the merger of British Airways and Iberia forming a new holding company International Airlines Group (IAG) in January 2011.
Now IAG, which is British Airways' parent company, has made two approaches for Aer Lingus, the second of which valued the airline at €1.3 billion (Dh5.2bn).
This bid has been accepted by the board but rejected by the Irish government, which still controls a 25 per cent stake in the airline.
As far as analysts are concerned it is a matter of finding the right price and then the deal will be done. The deputy prime minister of Ireland, Joan Burton, said on Thursday that a further offer was expected from IAG.
The timing of Mr Walsh's initial approach, before Christmas, was designed to cause maximum instability. Aer Lingus was in turmoil: its chief executive Christoph Mueller had left to join Malaysia Airlines and his replacement, Stephen Kavanagh, had not yet been announced.
There was also an opportunity. Aer Lingus is close to resolving long-running pension problems after shareholders backed a plan to pump €191 million into its pension scheme.
Meanwhile, passenger growth is picking up and by the end of last year Aer Lingus had €570m of net cash on its balance sheet.
The main attraction for BA and IAG is Aer Lingus' 23 pairs of take-off and landing slots at Heathrow, 3.5 per cent of the airport's total. Aer Lingus is the third-biggest operator at Heathrow, behind BA and Virgin.
The value of such slots – which give access to lucrative transatlantic routes – is huge. In 2014, American Airlines paid Cyprus Airways nearly £20m (Dh110.9m) for just two slots. "BA has a 'Fortress Heathrow' strategy. It's long haul that makes the money," says the aviation consultant Chris Tarry.
But the Irish government will not sell its stake without certain guarantees, and Mr Walsh has had to make promises – that the Heathrow slots will not be sold, that they will be used for flights to Ireland for five years and that the Aer Lingus name and head office location will not be changed.
Even so, Mr Walsh had to admit last week that his takeover approach may never get off the ground. "It's a want-to-do deal, a nice-to-do deal, but not in any way is it a must-do deal," the Irish-born chief executive said.
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