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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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If the uniforms in the above picture are involved on the flights i am selling all of my €66.78 shares to IAG and Mr Walsh.
Aer Lingus is profitable and profits are increasing all the time. I don’t see the need to sell Aer Lingus for the short term gain of a couple hundred million.
It’s a good employer tho take home wages has dropped for employees over the years because of cost cutting it still equals millions spent in the local economy.
If it’s not broken don’t fix it.
Consolidation in the airline industry is a term used by all the big players to justify eating up the rest and fair enough if the smaller airlines in trouble and failing. Aer Lingus is punching above it’s weight for its size and winning. Leave it be….
Seconded. We aren’t trying to start the biggest airline in the universe. Walsh’s prpeared speeches on the (as usal complaint or ignorant) media today should be enough to convince anybody that he has nothing in mind other than a steal. Eventually, the government are going to have to stop letting themselves be used as an adjunct to big business interests and hang on to assets like Aer Lingus
Little awkward hover hand action from Willie
Hover hand separates the men from the boys
5 tits in one photo. Am I allowed to say that?
Basically he’s saying he will only secure the slots at LHR for 5 years after which time we will start to see them slowly but surely filter away.
Then the jobs for Dublin (and cork and Shannon) which are primarily ground based will also be effected with only pilots, crew and engineers that bit more secure!!!
He’s supposed to be offering assurances! Not uncertainty!
NO!
He iscalling it as it is.
The 5 year commitment he has given is 5 years longer than Aer Lingus have given. If Aer lingus pull those routes tomorrow, there isn’t a damn thing the government can do about it
But that won’t happen as they are EIs profitable route.
Agreed, so if they are profitable for Aer Lingus they would also be profitable for IAG, meaning the Heathrow slot argument is nonsense
Other routes may be more profitable on those slots for aig. No nonsense about it at all
Des those slots would be far more profitable ex LHR to other destinations such as places in China, the U.S. etc!
At present there are up to 23 flights a day between Dublin and LHR! Of which Aer Lingus operate about 14 and ba the rest! What will happen is ba will pull off the route using its slots elsewhere and EI will essentially operate the route “for BA” for 5 years but at the same time increasing the cost of travel for the consumer! Then after 5 years we will see a further decline of flights from Dublin (and I’m not forgetting cork Shannon or Belfast either) as slots are used elsewhere and flights are simply substituted with slightly larger aircraft but a reduced flexible schedule which is poor for the business community!
Just look at what happened to Ineria on its Barcelona and Madrid services to Heathrow!
Yes it is nonsense Alan, one of the essential ingredients of a hub like heathrow is that it has short haul connecting passengers, so reducing feed would be a stupid decision. Plus there’s plenty of others hubs you can connect to from Dublin.
Shannon and Cork don’t have the same connection options but my point is still valid about not wanting to kill short haul feed.
Does Dublin need these slots Tom ?? We have pretty good global connectivity. From Dub .you’re probably right about BA dropping some Heathrow flights. The big fear for Dub is that it might just degenerate in to a spoke/feeder for Heathrow..
Tony that’s a load of rubbish and I don’t think you know very much about how the aviation industry operates in the real world.
Why would BA immediately cut the Dublin route for a start? It’s a very profitable route for them despite the fact there are so many daily flights. By simply stopping the BA services immediately and jacking up the cost of the Aer Lingus flights as you say, they’re not exactly enhancing the attractiveness of using Heathrow over one of the very many other hubs you can use ex Dublin now are they? Or if it’s about the point to point demand in London there’s plenty other competition on the other four London airports you can fly to ex Dublin
Dublin with its US re-clearance has the potential to be BAs fifth heathrow runway, with feeder flights from the UK regions.
Bob….DUB doesn’t need the London connections at all…it has excellent global connectivity. It is the 6th busiest transatlantic airport in Europe..where DUB is lacking is links to Asia…Amsterdam provides that anyway until we get our own..BA will keep fights to London because its the busiest air route in Europe.. We need to protect the Heathrow slots..we should be seeking to protect the transatlantic connections..DUB could loose some of its transatlantic connectivity to the smaller MAN where BA and AA codeshare….
It’s been said time and time again that growing transatlantic is one if IAG’s objectives. Transferring traffic from the UK regional airports through Dublin has been a key part of Aer Lingus’ profitability in the last few years. Aer Lingus is not going to have it’s transatlantic operations cut under the proposed IAG takeover. Aer Lingus have plenty competition on these routes at this stage anyway with all of the big Us airlines serving their own hubs ex Dublin
Please think a bit….. no airline could offer a promise that they will never sell the slots. Things change and companies have to respond. Five years is a good commitment and in any case, as Walsh stated, the Dublin/London route is a key element in the IAG strategy. Anybody who thinks that Aer Lingus has a long term future as an independent airline competing against Ryanair et al on the low cost side and the major international airline groups on the long haul side are in la la land. The strategy for Aer Lingus, agreed by those in government, has always been to get it into a position that it is a viable entity that a major player would be interested in buying. The turn around started with Walsh and has continued in fits and starts. It is time to do the deal and sell it on. Labour is gutless and will do anything to get some votes. They know that their only chance of having any relevance in the next election is to convince the 10-20% of “left-leaners” and socialist that they are “with them”.
If the government doesn’t do this deal now, there will be little interest from any major group in the next five years. Unless somebody like Ethiad swoops in and picks them up at less money on the basis that a government “no” decision to IAG will severely de-value the market value.
Smells of desperation when he feels the need to go to the media like this.
As recently as October, Willie Walsh was describing Aer Lingus as small, irrelevant, useless and could not emphasize how much he had no interest in acquiring it…
He’s racing to the finish right now because he knows the investment banks and financial institutions which back the middle eastern carriers have effectively frozen their ability to raise capital and make acquisitions.
Walsh knows that if oil recovers and stabilizes, and Aer Lingus revenues continue to improve with a rising economy, (they are reconfiguring their long haul planes with more biz class, and talking of relaunching european biz class) he will have to pay more.
He’s bluffing all the way, trying to grab it while it’s cheap and quite frankly you can’t trust a word he says…
Drew, should Walsh be in this scenario at all ? He is a former CEO who must be using the info he gleaned as CEO? Sounds very odd.
He will have had to take gardening leave between the positions… It’s assumed most market sensitive information will be out of date by the time he took the new role.
He had no interest before the pension issue was sorted, now that it’s sorted he is interested
He had access to most of that info anyway as a former pilot and ceo, he is still a member of the pension trust. Any information he does not already have can be obtained from his position as chairman of NTMA… The government agency that manages its stake in aer lingus. Considering he was just appointed last year by Noonan (himself an interested party if it is sold), the conflict of interest is huge.
The deal looks somewhat like it’s going south so Walsh starts to belittle EI. He / the company he heads up obviously thinks EI would be a valuable asset (given their consistent bidding).
It’s ridiculous to think he’s leaning towards the “you’re nothing without us anyway” attitude; childish.
He will probably be proven correct in the future if the deal doesn’t go through
Why?
Walsh has been proved wrong on more than he’s been proved right! I should know!
Why? Another spike in oil prices or deep recession would mean that Aer L would find it a lot tougher to weather the storm than if they were part of a larger airline group. They won’t disappear overnight but long term Walsh will probably be proved right
I’ll tell you exactly why awr lingus will fail.
1. Ryanair have already started flying into major European airports and will start to steal passengers from aer lingus on these routes due to a lower cost base enabling them to offer Lowe prices
2. The loss of these passengers will inevitably lead to aer lingus reduce and/or cancel services on these routes
3. The ever expanding transatlantic flights will start to suffer because they are reliant on connecting passengers from these destinations….and when they start to suffer, it’s goodnight folks!
He gave some good points today but no guarantees for regions just the country as a whole, no mention that if they hold so many slots they might be made give some up or is there a way to avoid that as EI would be independent. Jobs will naturally go and in future others created, the talk of solid guarantees on the slots was positive but let’s be honest we need someone to have “constructive” arguments against it instead of off the top of the head doomsday ones. Since BA took over BMI into Dublin they reduced the slots that were being used by 25% no one said the sky was falling because of it
Scott I’ll stop you there! They did not reduce the number of flights to Dublin!
For the few years prior to BMI ceasing operations their Dublin schedule had reduced to between 3 to 5 flights a day depending on the schedule!!!
In fairness to ba they have increased the schedule SIGNIFICANTLY to between 5 and 9 a day depending on the day of the week !!!!
I’ve travelled on the BMW Heathrow flights to Dublin. On a number of occasions these flights were within +/- 15 minutes of an Aer Lingus flight. On 1715 flight on a Friday had 5 people on a 200 seat plane.
If it smells rotten to everyday folk you can guarantee the government will do the contrary.
Who are the big winners ? The guys at the top of Aer Lingus management make a killing out of this being sold. All old friends no doubt of Willie. He has far too much past in this company and this will do nothing for Aer Lingus or their workers. Wake up people, this one does nothing for our country or taxpayers.
I’d rather be a captain in a small boat than a sailor in a big ship
big willy
“IAG have smart legal people drawing up a binding agreement to give the Irish government a say over any changes to the Heathrow slots”
Ha! I wonder who those “smart legal people” from IAG will give subtle preference to in such a contract? God forbid they might allow an unfortunate discreet loop hole which IAG may be able to take advantage of at a later point…
Can the govmint keep ownership of those landing slots and just let them have aer lingtus and be done with it? Maybe rent them out and make some money ?
Aer Lingus do not own the slots, they lease them from LHR, Aer Lingus have no right to sell any of them, they are only allowed to swap slot times with other airlines or give them up, they would then go back to LHR to go out for tender
So LHR could tell Aer Lingus or anyone buying it to eff off at any time ?
The government don’t own the slots and as it currently stands would have no say if they were moved around or leased to other airlines as what in fact does happen.
Yeah pretty much, if the lease agreement was up for renewal tomorrow and Ryanair offered 1 million more than Aer Lingus offered they can be given to Ryanair no problem at all, or any other airline at that. Aer Lingus can also choose to drop them tomorrow if they wanted to and no one can do jack about it, IAG offering to keep them for 5 years is 5 years longer than Aer Lingus at the moment.
IAG wont drop them, they’ll drop the northern England – LHR routes and send them into Dublin instead freeing up their own LHR slots and expand on the T/A routes from Dublin with EI and expand to the East with their own aircraft.
B73….that’s a nice thought ..Dubs runway’s may not support anything more than a fully loaded B777…this country club govt won’t invest in Dublin if u. Paid them to.
What’s the problem with Aer Lingus seeming small?. By comparison to Ryanair it already is.
I’m pretty tired of this “what about the regions” BS …Where are the stupid Dubliners. What about Dublin’s transatlantic business.. Where are the garauntees for Dublin. ??? .Dublin has very good global connectivity through Dubai , Abu Dhabi and Amsterdam . we don’t need to sweat over the Heathrow slots…. What’s in this for Dublin. ????
Michael get a grip man, we are a small country and its not like it takes 12 hours to get to Dublin. I’m a Dub living in the west and I’ve a pain in my backside listening to boggers moan about Dublin get this Dublin get that. Dublin is the capital and it where most people live so end of story.
Exactly my point Tom….These Dublin hating yahoos need to get over themselves out and the rest of develop and progress
Jayziz, who’s yer man in the picture? He’s gorgeous!!
Here we go again, a fg led government selling off a state asset. Reminds me of the esat digiphone licence being sold, nothing went wrong there.
It’s not a state asset, the state owns 25%. FF sold 75%.
and thats what FG think about our water.
That picture has ‘cast iron’. Written allover it.
I’d give a cast iron guarantee to those slots
Smooth talking with a well prepped brief and statement. Still doesn’t answer the question of how much the value of Heathrow slots are, cash reserves, other assets then factor in its profit making.
What the government stand to gain is a relative pittance but what we stand to lose is unknown.
A little tit surrounded by big tits
Bottom line it’s not about xenophobia it’s about consolidation ,mergers or takeovers (you decide) of one company by a much bigger conglomerate . It’s extraordinary that a board would recommend such a value based take over only to be repulsed by some self-interested tax-payer sponsored bunch of bozos in the Dail who have the ultimate say so especially when Ryanair with a larger stockholding . It’s posturing and naked politicking for self-interest with SFA to do with shareholder value or customer/employee satisfaction .
I remember when Irish travel agents wouldn’t sell you a ticket for a Ryanair flight and that attitude is alive and well today . The sh**s couldn’t stand the thought of O’Leary taking over and making the inevitable go of things and giving what after all is what the flying public want ; reasonably priced flights that run on time and get the traveller from A to B with minimal fuss. Go Aig go !
Willie should be told to shove his proposal…. Apparently the slots alone, are worth what he’s offering. He wants the rest as a freebie… Take a one way Willie.
It seems to be way undervalued, and as Willie says that is his best price, if he is delayed or God forbid asked for more, his next offer will be less. ( is he a charity or what) Well Willie thanks for nothing, don’t let the fore hit you in the arse on the way out.
Willie may guarantee that AerLingus retains the slots – but does he guarantee that they will be used for the Dublin – London flights? Could these slots be taken for other routes?
The crew are wearing less these days lol.
The issue of “slots” seem somewhat uncompetitive and restrictive to my mind not to mention outmoded. Why should one airline have a mini monopoly over slots at any airport in the EU when there is in theory supposed to be the right of free movement of goods persons and services .
Any practice or commercial custom or convention that restricts the flying public’s access to and from any airports in the EU must be wrong and should be challenged !
Just a thought
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