Ireland may sell its 25% stake in Aer Lingus
Published: September 8, 2011
Aer Lingus A320. By Rob Finlayson
The Irish government is considering the sale of its 25% stake in Aer Lingus (EI) because it is no longer seen as a “strategic” asset, transport minister Leo Varadkar said Wednesday.
“No formal decision on that [EI sale] is made yet,” Varadkar said in a radio interview, which was cited in Irish media. “What I can say is that that stake in the past was held for strategic reasons and, having studied the matter over the summer, I don’t think that really stands anymore.”
The divestment of the EI holding was included in a government-sponsored report published in April as part of the country’s commitment to raising approximately €2 billion ($ 2.8 billion) from sales of state assets to reduce high public debt. The report also listed the Dublin Airport Authority (DAA) and the Irish Aviation Authority as possible disposal targets. The sale of one of the terminals at Dublin airport might not yield much money for the government owing to the DAA’s pension deficit, according to Varadkar.
Ryanair, which is EI’s largest shareholder with close to 30% ownership, said in a statement it would not bid for the 25% stake if the government indicated such an offer would be unwelcome. It also said it would “welcome” and work with another financially strong airline/investor to restore shareholder value and even consider selling its own stake.
“Should another financially strong airline/investor acquire the government’s 25% stake, Ryanair would not rule out entering into discussions with that party for the subsequent disposal of Ryanair’s near 30% stake, subject to an acceptable agreement on price and maximizing shareholder value,” it said.
Britain’s Office of Fair Trading (OFT) last year opened an investigation on whether Ryanair’s ownership of the stake in EI hampers competition in the sector (ATW Daily News, Nov. 1, 2010). OFT said earlier this month it expects to make a decision by Oct. 26.