Abu Dhabi: The purchase of a major stake in Irish carrier Aer Lingus will be discussed between Etihad's Chief Executive Officer James Hogan and Ireland's Minister of Transport when the two meet before Monday, Gulf News has learned.
The meeting, likely to be held tomorrow, will try to resume talks which followed initial discussions in September.
Currently, the cash-strapped Irish government owns 25.1 per cent of Aer Lingus. After accepting a €95 billion (Dh443.65 billion) bailout from the European Central Bank and the International Monetary Fund in November 2010, Dublin has been forced to adopt a strict austerity programme — and its state-owned assets are under review for possible selloff.
"No formal government decision has been made to dispose of Aer Lingus yet," Leo Varadkar, Ireland's Minister for Transport, Tourism and Sport, told Gulf News yesterday.
"But we have had preliminary talks with Etihad on the possible sale of the Aer Lingus asset and those talks are stalled," he said. Varadkar will be using his meeting with Hogan to move the talks forward.
Valuation
Currently, the 25.1 per cent stake is valued at €95 million according to market capitalisation.
Since the September discussions, Etihad has spent €95 million on a 29.1 per cent stake in airberlin.
Other airlines and private equity funds have also expressed an interest in Dublin's Aer Lingus stake.
"Certainly, the slots are of interest to airlines," Varadkar told Gulf News.
Because of a close relationship between Dublin and Washington, any US-bound travellers from Ireland are pre-cleared in Dublin, something which Etihad would also find attractive.
"Any Gulf national travelling to the US through Ireland would be pre-cleared in Dublin," the minister said.
The pre-clearance would eliminate long delays at Homeland Security checks for tired travellers coming off transatlantic flights when they land at US destinations.
The minister was in Abu Dhabi as part of the Volvo Ocean Race celebrations. The race will be stopping off in Galway in April.
Emirates will begin daily service to Dublin on Monday and Etihad currently operates regular services to the Irish capital. Travellers to Ireland on the UAE carriers will be able to choose between 17 flights each week.
Varadkar is also hoping to raise awareness in Irish commercial development and properties, which have been taken over by Nama, Dublin's agency for distressed assets, brought about when property prices collapsed by 50 per cent since 2007.
"Certainly there is a lot of liquidity in the Gulf and in its sovereign wealth funds and we believe there is a role for the Gulf to play in investing in Ireland," Varadkar said.
Pension liabilities rock negotiations
The crux of the talks centres on pension liabilities for current and former staff of Dublin Airport-based Aer Lingus. But the purchase of the Irish government shares would give Etihad access to 17 pairs of landing slots Aer Lingus owns at London's Heathrow Airport. That airport is operating at more than 98 per cent capacity, and since plans for a proposed third runway there have been put on hold, there is little room for airlines to increase services to Europe's busiest airport. Acquiring Aer Lingus would remove that problem for Etihad, and allow it to provide peak-time services ahead of other Gulf airline rivals.
Between the airberlin investment and the Aer Lingus slots, Etihad would be building a flexible and widespread European service network relative cheaply.
