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Irish Government To Sell Stake In Aer Lingus

Irish Government To Sell Stake In Aer Lingus

The Irish government has agreed to sell its 25% stake in Aer Lingus to International Airlines Group (IAG), the owner of British Airways.

IAG made a €1.36bn (£1bn) offer for Ireland's flag carrier in January, but said any final deal was conditional on acceptance by the Irish state and Ryanair, which owns 29% of Aer Lingus.

Transport minister Paschal Donohoe confirmed in a statement: "Following detailed consideration of ... 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."

In February, Dublin presented IAG with a list of demands it said must be met before it would consider the sale.

They related to job security, transatlantic services and a longer guarantee on maintaining connections between Irish airports and London's Heathrow airport, where Aer Lingus holds valuable runway slots.

Mr Donohoe said the €2.55-a-share deal was approved after ministers received "additional information and certain commitments".

The sale has been a hot topic for Dublin, with severe opposition within the junior government coalition party, Labour, and trade unions who warned about future implications for jobs and connectivity.

To quell opposition, IAG promised to maintain the Aer Lingus brand and its head office in Dublin.

The rubber stamp - which will have to be voted on in parliament - clears the way for IAG to make a formal bid, although rival Ryanair still has to declare its hand.

Ryanair spokesman Robin Kiely said its board "will consider any offer on its merits, if and when an offer is made".

IAG chief executive Willie Walsh said the proposed takeover had a "compelling and financial rationale".

"Aer Lingus, Ireland and IAG would all benefit from this deal," he said.

"Aer Lingus would maintain control of its brand and operation while gaining strength as part of a profitable and sustainable airline group in an industry that's consolidating."

Aer Lingus was privatised nine years ago, leaving the Irish government with its 25% stake.

On Tuesday, Ryanair reported a 66% increase in net profits in the last year.

Its profits after tax increased by two-thirds from €523m (£370m) to €867m (£613.6m) in the 12 months to March.