British Airways parent IAG set for Aer Lingus takeover

Shareholders of Aer Lingus backed a number of resolutions clearing the way for the €1.36 billion (Dh5.42bn) sale of the airline to the parent of British Airways.

An Aer Lingus plane taxis before take off at Dublin airport. Cathal McNaughton / Reuters

Shareholders of Aer Lingus yesterday backed a number of resolutions, clearing the way for a €1.36 billion (Dh5.42bn) sale of the airline to the parent of British Airways, moving its minority shareholder Etihad Airways closer towards a divestment of its stake in the Irish flag carrier, possibly within a few weeks.

At an extraordinary general meeting in Dublin, Aer Lingus shareholders voted on resolutions linked to the deal with International Airlines Group (IAG). The Aer Lingus chairman Colm Barrington said that IAG would take over Air Lingus “within two weeks”.

The deal already has the backing of regulators in the United States and Europe. Between 2012 and last year, Etihad had accumulated more than 4 per cent of share of the Dublin-based carrier.

According to analysts, the sale of its stake following an IAG takeover would net the carrier about €40 million, which could be channelled towards other European airlines in which it has stakes, such as the struggling airberlin and Alitalia.

“I suspect they will either redeploy that investment into airberlin, [India’s] Jet Airways, or someone else – or they could hold that revenue for future use – such as pay down airplane buys for their remaining orders,” said Saj Ahmad, the chief analyst at StrategicAero Research.

But the stake sale does not serve the strategic alignment that Etihad originally wanted with Aer Lingus, which was never fully realised. Network benefit, not a quick return on investment, drives Etihad’s strategy.

James Hogan, Etihad’s chief executive, said in March that his company bought its stake in Aer Lingus based on a strategy of increasing the number of flights between Dublin and Abu Dhabi.

The original plan was for a “large investment”, but once it became clear that the management of the Irish carrier did not share Etihad’s vision, the airline moved on to focus on deals with airberlin and Alitalia.

Etihad’s growth strategy is focused on expanding its global route network by codeshare partnerships and forming equity alliances, in which it invests in carriers in strategically important regions. Its equity alliance partners include airberlin, Alitalia, Virgin Australia, India’s Jet and Air Seychelles.

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