Reply To: Aer Lingus rejects IAG offer again

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IAG´s bid for Aer Lingus is quite logical, even if not desired by some.

The obstacles are quite clear. Would there be a restriction on competition between London and Ireland? On flights from LHR the answer is clear but on city pairings the main competition is between Aer Lingus and BA against Ryanair and Easyjet(Belfast).
However, since Ryanair already owns 29.9% of Aer Lingus Does not that danger already exist?

The Irish government would not look kindly on any reduction of Aer Lingus flights into LHR from any of the Republic´s airports (remember the hoohaa created by the reduction of flights to/from Shannon).
Thus I see that BA would consolidate its position on the routes by reducing its own frequencies or even withdraw from Dublin(as previously) – Belfast might be a step too far politically to withdraw from.

Little Red´s slots are also up for grabs. Virgin Atlantic closes its routes from March and if there are no takers to substitute Little Red(operated by Aer Lingus) then thay revert to BA.

In those two ways BA could increase the number of slots for other destinations.

The shareholders could be a problem. The Irish government´s 25% share might well be sold under the right conditions, and price, as already stated. Ryanair would probably be glad to sell without losing money on its stake, as it is being forced to do at the momemt. This would enable O´Leary to consider seriously the purchase of Cyprus Airways,(as he stated previously) or at least its assets after its closure.

The unknown element is Etihad which has a 4.9% shareholding. Would it make a serious attempt to take over Aer Lingus(to a maximum permitted 49%) to consolidate into its alliance or would it accept the inevitable if the Irish Government and Ryanair jumped ship?

In my view IAG will win through. Dublin will be promoted as a gateway to the USA and Canada, especially from the UK regions to protect BA from the transatlantic flights from Paris, Brussels, and Amsterdam. After all BA would just be looking after its own back yard.

Edited: 17-1-15

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