Irish PM wants 'cast iron' guarantees on Aer Lingus sale

By Reuters

Feb 01, 2015 06:15 PM EST

The owner of British Airways must provide some sort of "cast iron permanent guarantee" on flights to Ireland if the government is to even consider its bid for Aer Lingus (AERL.I), Prime Minister Enda Kenny said on Sunday.

Aer Lingus's board on Tuesday recommended a 1.36-billion-euro ($1.5 billion) offer from International Consolidated Airlines Group (ICAG.L) (IAG), subject to the agreement of its two largest shareholders -- budget airline Ryanair (RYA.I) and the Irish state.

Under pressure from the airline's trade unions and opponents in parliament, resistance is building within government around parting with its 25 percent holding, weighing on the airline's shares as IAG decides on a formal bid.

"If IAG are going to come to the table in the next few days, then I need to see, in so far as this is possible, a cast iron permanent guarantee in respect of connectivity for Cork, for Shannon, Dublin and a lesser extent Knock," Kenny told national broadcaster RTE, referring to regions the airline flies to.

"I'm also cognizant of the voices of those far more experienced in business than I who say that this kind of guarantee might be difficult to get... We're in a limited influential position here."

Kenny said such guarantees would only form part of the government's decision but later wrote on his Twitter page that they would be needed "before gov can even consider selling its stake in Aer Lingus."

A successful takeover would give IAG more take-off and landing slots at London Heathrow Airport, BA's home base and a major European hub for international flights. Government MPs fear some slots would no longer be used to service Ireland.

IAG intends to operate Aer Lingus as a separate business with its own brand and said it recognizes the importance of direct air services for investment and tourism in Ireland. Kenny said he needed to see flesh on those initial intentions.

But he was also concerned about what may happen after Willie Walsh's term as IAG boss ends. The Dublin-born executive began his career as an Aer Lingus pilot before eventually running the airline, and is also chairman of Ireland's debt agency.

"Long after Willie Walsh leaves IAG, what is the position? I'm worried and concerned about the future of the country... Many of the multinationals, exporters look for the future economy, we cannot afford to lose anything that we have," Kenny said.

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