Irish financial investors will think twice before investing in Aer Lingus, according to Dublin banking sources. Any investment would require the airline to be either sold or floated once the market recovered and would pay no significant return in the interim period of several years.
Government sources, however, have said that a consortium of Irish businessmen may be prepared to take a strategic stake in the troubled airline, which needs a £150 million-plus (€190 million-plus) cash injection. The State is to allow the airline sell up to 35 per cent of its equity to raise the cash and the search for an investor is under way. The cash would be used to fund a rescue package, the bulk of which would be redundancy payments for 2,000 of the 6,300 permanent staff. Even when the package is implemented, the airline will not return to profit until 2003.
British Airways and other airlines in the Oneworld alliance would be the obvious suitors for Aer Lingus, but they are all facing financial problems. Several well-known Irish businessmen with connections to the aviation business could rank as possible investors - among them the brothers Desmond and Ulick McEvaddy.
The McEvaddy brothers own Omega Air, which claims to be the largest owner and leaser of Boeing 707 jets in the world. The company has refurbished the ageing jets for a number of purposes, including as an in-flight refuelling tanker that is leased to the US airforce and other militaries. The McEvaddys have long harboured an ambition to build a second terminal at Dublin airport and have good connections with the current Government. The Minister for Finance, Mr McCreevy, and the Tβnaiste, Ms Harney, holidayed controversially at Mr Ulick McEvaddy's villa near Nice in France two years ago. Neither of the McEvaddys were available at their Dublin office yesterday.
Mr Paul Coulson and his Yeoman International investment company are another possibility. Mr Coulson invested in commuter airline CityJet when it got into difficulties in 1997. He subsequently sold a majority stake to Luton-based Air Foyle in 1999 as part of a deal that saw Air France come on board. Yeoman sources said yesterday that the company had not been in contact with the Government over Aer Lingus.
IFSC-based financier Mr Dermot Desmond might also take a look at Aer Lingus. International Investment and Underwriting (IIU), his best-known vehicle, has taken stakes in several poorly performing Irish stock market companies in recent years, but none of the investments are of the scale envisioned at Aer Lingus. IIU did look at a leveraged €3 billion buyout of Eircom this year but, in the end, did not make a bid. Raising the £150 million to £200 million required by Aer Lingus would not present much of a problem for Mr Desmond, who has a number of wealthy associates. He has an interest in the sector via London City Airport and was an investor in Pembroke Capital, the aviation leasing company that was sold this year. Mr Desmond is a former chairman of Aer Rianta. IIU declined to comment yesterday, but senior banking sources played down the possibility of Mr Desmond investing.
