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A compromise over the fate of valuable take-off and landing slots at Heathrow held by Aer Lingus could be reached between International Airlines Group and the Irish government.
Dublin is demanding that the British Airways owner extend its guarantee to keep Aer Lingus’s 23 pairs of Heathrow slots covering Irish routes from five years to as many as ten.
The issue has emerged as the biggest barrier to IAG’s planned £1 billion takeover of the carrier in which the Irish government has a 25% stake.
IAG chief executive Willie Walsh said last month that he would not go beyond five years.
However, the Financial Times reported people familiar with the deal as saying IAG and the Irish government are closer to agreement than they have ever been.
The main sticking point is whether Mr Walsh and the Irish government will compromise on the Heathrow slots guarantee.
IAG has made clear that any extension of its five-year guarantee for keeping the Aer Lingus slots on Irish routes would have to be commercially sound. This would require significant concessions which Dublin may not be able to deliver.
Among the areas likely to be under discussion are a cap on Irish airports’ landing charges for the period of the Heathrow slots guarantee. This would limit IAG’s risk on costs, according to analysts.
However, it could be difficult for the government to commit to a cap on charges because they are set by an independent regulator.
Ireland’s Commission for Aviation Regulation last October set charges for the period 2015 to 2019, stipulating that they should fall by 4.2% each year.
IAG and a review group set up by the Irish government to examine its bid for Aer Lingus are due to meet again today (Friday), as talks continue on the possible deal.