After all the public handringing since December (genuine or otherwise) over the IAG bid for Aer Lingus by politicians, unions and others, Colm Barrington, Chairman of Aer Lingus, finally spelt out the facts of life from the airline’s point of view to the Oireachtas Joint Committee on Transport and Communications on Tuesday 17th February 2015.
“Let me start off by stating our position very clearly,” he said. “My own and the Aer Lingus Board’s strongly held view is that a combination of Aer Lingus with IAG has a compelling strategic rationale and will deliver significant benefits to Aer Lingus, to Aer Lingus’ employees, to Aer Lingus’ customers and to Ireland.
“It is the Board’s view, having received advice from its financial advisors, that the proposed price of €2.55 is at a level that should be recommended to its shareholders. Over recent weeks we have listened carefully to the public debate regarding IAG’s proposal. During this period we have had further detailed discussions with representatives of IAG and the Aer Lingus Board has a greater understanding of IAG’s intentions for the future of Aer Lingus and the proposed commitments that IAG is prepared to make in relation to Aer Lingus and to the government. These discussions have further confirmed that it is clearly in IAG’s interests to continue to grow Aer Lingus within the IAG Group.
“Aer Lingus being part of IAG represents a hugely positive opportunity for Aer Lingus and for Ireland. This deal is about accelerated growth. It provides real prospects for long-term economic growth, for growth in global connectivity, for growth in international trade, for growth in tourism and for growth in employment. I am surprised that it can be represented in any other way. It is on the basis of these understandings that I, and the Aer Lingus Board, have given our strong support to the proposed transaction.
“Last week Aer Lingus met with the interdepartmental group established by the Minister for Transport, Tourism and Sport and with the Minister to set out the Board’s views on these benefits of the proposed deal. It is worth summarising for the Committee what we said at these meetings regarding the benefits of IAG’s proposal and the key commercial drivers of the Board’s view that the proposal represents a compelling and significantly positive opportunity for Aer Lingus, its employees, its customers and for Ireland:
– Aer Lingus being part of the IAG group will enhance Ireland’s position as a natural hub linking Europe and North America
– Ireland’s location at the western-most point in Europe makes it a natural gateway to connect the combined populations of Europe and North America
– Aer Lingus believes that IAG’s proposal can enable Ireland to become a central hub for European traffic across the Atlantic resulting in better utilisation of the infrastructural investment that has taken place at Irish airports
– Growing our current share of this traffic from its current 2% level to even 4% or 5% – and additional one to two million passengers per year through Ireland – will have huge positive benefits for Aer Lingus, its employees, and for Irish airports and their employees as well as a myriad of ancillary support services
– Aer Lingus being part of the IAG group will accelerate Aer Lingus’ transatlantic growth plans
– Aer Lingus sees the potential for its planned growth in transatlantic traffic to be significantly accelerated and for new US destinations to be added to its network.
“There is an immediate prospect to accelerate our plans to open two new destinations in North America, one on the US East Coast and one on the West Coast. Opening these routes would require the acquisition of two more long-range aircraft and would provide at least 200 new direct and highly skilled jobs in Aer Lingus and multiples of that number in support services and the economy in general.
– Aer Lingus being part of the IAG group will deliver employment growth — additional transatlantic traffic and destinations growth will create significant numbers of new jobs in Ireland, including new direct and highly skilled jobs within Aer Lingus and new indirect jobs in support activities and the tourism sector
– Aer Lingus being part of the IAG group will enhance Aer Lingus’ European growth
– Aer Lingus’ short-haul services, including on the Dublin, Cork and Shannon to London Heathrow routes, will directly benefit from sales and marketing activity conducted on its behalf by the British Airways, Iberia, Vueling and Oneworld partner sales forces. This will strengthen the position of the Cork and Shannon routes to London Heathrow in particular and will provide additional visitor traffic to the Southern and Mid-West regions, as well as to the rest of the country
– Irish tourism will also benefit from greater exposure to the frequent flier programmes of Oneworld members, particularly those of American Airlines and British Airways
– Aer Lingus being part of the IAG group will strengthen Ireland’s connectivity — the expected benefits to both Aer Lingus’ Atlantic and European networks brought about by Aer Lingus being part of the larger IAG group will result in better connectivity to and from Ireland
– Aer Lingus being part of the IAG group will allow access to a global cargo network
– Aer Lingus’ cargo business will benefit from the global network reach and sales channels of the IAG Cargo business. This enhancement of the cargo network is expected to deliver significant benefits and additional options to Irish businesses, particularly the pharmaceutical business
– Aer Lingus being part of the IAG group will continue to be a separate operating business and the Aer Lingus brand will continue and flourish. As part of the discussions with IAG, Aer Lingus has also confirmed IAG’s intentions to preserve Aer Lingus as a separate operating business within the group with its own brand, management, head office and operations. This position was strongly confirmed publicly by Mr Walsh to this Committee last week.
“I would like to conclude my remarks by reiterating that it is the strong view of the Board of Aer Lingus that the prospect of Aer Lingus being part of the IAG group has a compelling strategic and commercial logic for Aer Lingus, has significantly positive benefits for Ireland and is strongly supportive of the Irish Government’s two airline policy.
“Following a combination with IAG, Aer Lingus will have a much greater number of more attractive growth options that will significantly benefit Aer Lingus as a company, its employees, its customers, the tourism sector, Irish business and industry and the airports at which Aer Lingus operates. Simply put, the proposed combination with IAG has very significant benefits for Ireland.
“We are fully aware of the concerns that have been expressed by various political parties regarding the IAG proposal. In addition to appearing before this Committee today, Aer Lingus is willing to further meet individual parties in order to further clarify our position.
“We believe that this is a very good opportunity for Aer Lingus and Ireland and I hope that collectively we can give it the support that it needs and deserves.”