Irish government agrees to sell Aer Lingus stake to BA owner IAG

The Irish government has finally agreed to a stake sale in flag carrier Aer Lingus to British Airways-owner IAG, almost clearing the decks to the €1.4 -billion deal.

The one roadblock now that remained was Michael O'Leary's Ryanair, which owns 29.8 per cent of Aer Lingus, who would need to be convinced to back the takeover.

O'Leary had in the past said that the company would consider any offer from IAG.

Ryanair had tried to fully acquire Aer Lingus three times in the past, but the Irish government had blocked the deal over concerns that it would give Ryanair dominance over travel to and from Ireland.

Ryanair has also been fighting a decade-long court battle against the UK regulators on retaining its stake in Aer Lingus.

The UK Competition Commission had demanded that Ryanair cut its stake in Aer Lingus from 28.5 per cent to 5 per cent since the holding gave it undue influence over Aer Lingus.

IAG's takeover of Aer Lingus is contingent on both the Irish government and Ryanair agreeing to sell their stakes.

According to Paschal Donohue, Ireland's transport minister, the sale of the former Irish state carrier to IAG could now move ahead.

The Irish government owns 25 per cent of the airline. Its agreement, after six months of consideration, was critical for the deal to progress.

Following a cabinet meeting on Tuesdayy evening, Donohue said, ''IAG has provided additional information and certain commitments in relation to its proposal. Following detailed consideration of this and all of the issues surrounding a potential disposal of the state's shareholding in Aer Lingus, the government has decided that it will support IAG's proposal,'' The Guardian reported.

IAG had further extended guarantees about routes to Ireland from Heathrow, from five to seven years, although they fell short of the decade-long commitment sought by the Irish government. The guarantees would also depend on airport charges being limited to inflation.

IAG has also promised to add two new transatlantic routes next year and 2.4 million more passengers by 2020.

Earlier yesterday, Aer Lingus chief executive officer Stephen Kavanagh wrote to the minister giving some assurances over protecting existing Irish jobs at the airline in the event of the takeover.

Kavanagh and the Aer Lingus board had backed IAG's plans after it took control of the carrier.

Kavanagh wrote to the minister, ''the airline's preference is to continue to use Irish crew bases – provided it continues to be as competitive and efficient as at present – and to only restructure its business when required.''

Later on Tuesday evening, an IAG spokesman confirmed that the takeover was going ahead.

The sale of the Irish state's 25 per cent share in Aer Lingus had been opposed by the two main opposition parties – Fianna Fáil and Sinn Féin – along with several leftwing deputies in the Dáil, the lower house of the Irish parliament.