The City’s leading aviation analyst believes International Airlines Group will return with an improved takeover offer for Aer Lingus.
Nearly three weeks after news broke of a reputed €1.15 billion offer from the British Airways owner, neither side – nor Aer Lingus shareholders Ryanair and the Irish government – has broken cover on whether a deal will get off the ground.
However, Andrew Lobbenberg, the veteran HSBC airlines-watcher, believes that a deal makes sense and, while complicated, is achievable, the Times reported.
“We see the logic of a combination between IAG and Aer Lingus,” he said in a research note.
The IAG approach has posed a problem for Aer Lingus, which comes with the baggage of a less-than-straightforward share register, in which t
The Irish government holds a 25% stake from state ownership days and Ryanair holds 29% of Aer Lingus.
Lobbenberg said that any deal could pass only if Dublin was happy with future employment and competition issues.
As for the Ryanair stake, he conceded that a deal would, unusually, also have to have the say-so of a largest shareholder, which effectively would be the biggest competitor of a combined IAG and Aer Lingus.
However, Lobbenberg added: “We would not see this as a challenge. IAG evidently is interested in buying and we think Ryanair is ready to monetise its Aer Lingus holding.”
Lobbenberg puts a €1.5 billion value on Aer Lingus and believes that IAG would have little trouble funding a deal, since it has €4.9 billion in cash and deposits on its balance sheet.
It is widely believed that the board of Aer Lingus is ready to speak to IAG at the right price.