International Airlines Group outlines its plans for Aer Lingus as it seeks to assuage Irish Government’s concerns

Since Aer Lingus formally recommended a takeover bid from International Airlines Group (“IAG”) there has been a growing political storm in Ireland amid doubts as to what IAG’s ultimate intentions are for Aer Lingus, specifically with regard to links between the Republic Of Ireland and London Heathrow.

IAG has sought to assuage these concerns by today releasing a statement providing assurances as to connectivity between London Heathrow and Ireland.

Here’s a précis of these assurances.

1. What IAG has already said

a) Aer Lingus will retain its own brand and have its own management

b) Aer Lingus will join the Oneworld alliance

c) Aer Lingus will join the transatlantic joint-venture between American Airlines, British Airways, Finnair and Iberia.

2. What IAG has additionally said today

a) Aer Lingus’ 23 slot pairs at London Heathrow, cannot be sold, including to other IAG airlines

b) Aer Lingus’ name, head office location or place of incorporation in the Republic of Ireland, cannot be changed

c) IAG is prepared to offer a further commitment to operate the slots on Irish routes for five years. This is protection that the Government does not have today.

3. What IAG doesn’t say

a) IAG only commits to use Aer Lingus slots on routes to the Republic Of Ireland, not to specific cities such as Cork and Shannon.

b) IAG only commits not to sell the slots. It is unlikely IAG would do this in any event. The slots could be leased to other IAG group airlines. Indeed, we would expect IAG to reallocate slots between group airlines, if only to improve scheduling and overall operational efficiency.

c) IAG does not make any mention of its plans for Aer Lingus hub at Dublin specifically with regard to opening up new transatlantic routes or expanding the Aer Lingus fleet. Additional routes to American Airlines hubs in Dallas Fort Worth, Miami and Los Angeles would be an obvious area of expansion. Though we understand IAG would be reluctant to give commercially sensitive information away.

d) IAG doesn’t mention how Aer Lingus may benefit from additional co-operation with IAG airlines, beyond joining Oneworld and the transatlantic joint-venture. This could include, for example, co-location with BA at London Heathrow Terminal 5 (perhaps unlikely as Aer Lingus has moved into Terminal 2) and co-operation and codesharing with Iberia and Vueling.

We suspect this has much further to run. Although we expect IAG to be patient, it will probably have to give more concrete assurances.

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