Aer Lingus has told the Minister for Transport, Mr Brennan, that he should consider allowing institutions take a minority stake in the airline.At a meeting yesterday the airline's chairman, Mr Tom Mulcahy, and chief executive, Mr Willie Walsh, told the Minister a flotation, management buy-out or trade sale were not right for the company in the current environment.
The Aer Lingus representatives told the Minister that selling to outside investors was the best option, but they offered the advice only in the context of the Government formally deciding to sell part of the airline.
Selling a stake of between 20 and 30 per cent is the most likely option, said sources. The three are planning further discussions in the coming weeks and Mr Brennan will also brief the Minister for Finance, Mr McCreevy, and Government colleagues.
While the decision is ultimately for the Government, there is little support in the airline or in the Department of Transport for flotation. While the controversial flotation of Eircom is one consideration, sources pointed out that few IPOs were in the pipeline in Ireland generally.
The airline's management is opposed to the MBO option and a trade sale is regarded as unsuitable because other airlines are under serious financial pressure and are unlikely to make attractive bids.
Sources said the Department of Finance favoured a sale because it could raise significant funds at a time when the budgetary position is bleak.
However, no decision is expected in time for this year's budget. "It is now a live issue; up to now there have been all kinds of suggestions, now the matter has come on to the political agenda for real," said a source.
In a document presented to Mr Brennan the airline says it has no immediate capital requirements and consequently any sale would result in a benefit to the Exchequer. A price tag of about €600 million has been put on Aer Lingus by aviation analysts in recent months.
The Government owns just over 85 per cent of the airline and the discussions are concerned with what to do with this stake. Further meetings with the Minister are planned, but sale of the 14.9 per cent owned by the employees is not on the agenda.
Meanwhile, the company is close to closing a deal to renew its short-haul fleet. The Irish Times understands Airbus, and not Boeing, will be the chosen supplier and an official announcement is imminent.
The airline is expected to spend in excess of €300 million on a range of Airbus craft. The deal is understood to be a blend of outright purchase and lease. The airline is expected to fund the purchase from its reserves.
Aer Lingus currently operates Boeing, Airbus and BAE aircraft, which all require different maintenance regimes. Aircrew must also be trained to operate the various planes. A single fleet would radically reduce these costs.
