Updated at 5.05pm
IAG CEO WILLIE Walsh has offered a ‘cast-iron, legally binding’ guarantee that Aer Lingus’ flight-slots at Heathrow Airport will remain as they are for at least five years.
Walsh was speaking before a meeting of the Oireachtas Transport Committee this afternoon.
It was an assured performance from the IAG chief executive, one where he never appeared particularly troubled by his various interrogators’ lines of questioning.
“Our intentions are completely positive regarding Aer Lingus, we bring strength and support that they can’t have as a standalone airline,” Walsh told the committee.
Walsh said that Aer Lingus’ Heathrow slots had no bearing on any takeover given that AIG already had ‘tons’ of slots of their own.
We are prepared to offer a cast-iron solid legally binding guarantee that ownership of the Heathrow slots will remain with Aer Lingus.This is not a guarantee that anyone else is in a position to offer, not least the Irish Government.But it is contingent on receiving an irrevocable commitment to sell their shares from Ryanair and the Irish Government.
Regarding the issue of connectivity with Ireland’s airports other than Dublin, Walsh insisted that he was willing to offer a similar five-year guarantee that all routes between Cork, Shannon and Heathrow will remain as they are.
He would not be drawn on a greater than five-year commitment, insisting that to make such a commitment would be ‘madness’ in a commercial marketplace.
He insisted that Aer Lingus would continue to be run by the company itself, with the ownership by IAG merely a facilitator regarding expansion and heightened access to transatlantic routes via IAG’s subsidiary American Airlines.
Under questioning from Fianna Fáil’s Timmy Dooley, Walsh said that talk of job losses on a scale seen with IAG’s takeover of Iberia Airlines, where 1,200 employees lost their jobs, was ‘complete nonsense’, insisting that Iberia was an airline in need of restructuring in a recession while Aer Lingus was much further along in its development.
Independent TD Michael Fitzmaurice then queried whether the prospective takeover would see IAG with a monopoly of Irish aviation and received a forthright reply.
The idea that anyone could operate a monopoly when Michael O’Leary and Ryanair are on your doorstep is nonsense.
When further pressed by Fianna Fáil Senator Paschal Mooney that following any takeover job losses and more expensive flights would inevitably follow Walsh’s response was bullish.
I cannot agree with anything the senator has said. My commitments are legally enforcible, and besides why would we do anything different?
We are a long-term player in this business, we would be adding support to Aer Lingus nothing else.
As far as flight-costs go, this is a brutally competitive business, and that competitivity will keep the airlines in check.
Political posturing ‘damaging’
Earlier, the IAG boss had told RTÉ’s Today with Sean O’Rourke that politicians’ posturing over the proposed sale was becoming “commercially damaging” for the Irish carrier.
“What we can bring to Aer Lingus that they don’t have as a standalone airline is the strength of the IAG airlines at one end,” he said.
Walsh, himself a former head of Aer Lingus, is in Dublin to sell IAG’s proposed buyout to skeptical politicians who will decide whether to hand over the government’s 25% stake in the Irish carrier.
He denied the airline would be “emasculated” as part of the bigger airline group, which controls British Airways, Iberia and Vueling, adding that Aer Lingus was “a very strong brand” that would fit well within IAG’s structure.
It punches well above its weight … (but) Aer Lingus will start looking very small in an industry that consolidates around them and their ability to continue to grow in that environment and their ability to support the expansion plans they have … will come into question,” he said.
The hard sell
IAG, the parent company for British Airways, Iberia and Vueling, made a provisional offer last month to buy Aer Lingus for €2.55 a share, which values the airline at about €1.35 billion.
But it has said the deal is conditional on the airline’s two biggest shareholders, the Irish government and budget carrier Ryanair, giving their stamps of approval.
Political roadblocks
There has already been opposition from all the main political parties except Fine Gael, although the biggest stumbling block to the deal clearing the Dáil will probably come from junior coalition partner Labour.
Several of its TDs have raised concerns about the sale, particularly about potential job losses in their Dublin constituencies if IAG goes on a cost-cutting drive after a successful buyout.
Other interest groups, including the hotels and restaurants lobbies, have voiced their opposition to the deal because of the potential loss of international flights from airports outside Dublin.
‘Unhelpful’ and ‘damaging’ commentary
In response to the complaints, Walsh today said IAG had ”smart legal people” drawing up a binding plan that would give the Irish government a say in the use of Aer Lingus’s valuable Heathrow slots.
“We can see great prospects of feeding traffic on Aer Lingus into their transatlantic network, expanding their transatlantic network, operating more services to existing destinations and more destinations,” he said.
I think all of the commentary about Aer Lingus and what some of the politicians have said is unhelpful and potentially commercially damaging to Aer Lingus in the longer term.”
Walsh earlier said union warnings about 1,200 job losses at Aer Lingus were “complete nonsense” as they were solely based on the Iberia cuts, which came on the back of a deep recession in Spain.
However he admitted “some jobs” in Aer Lingus’ head office would go because they wouldn’t be needed as part of the bigger company.
Originally published at 12.23pm
Additional reporting by Cianan Brennan
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