IAG deal would boost passenger numbers, Aer Lingus head says
TRAINING DATE: 08/08/2019
Irish Times 25th February
A deal with International Airlines Group (IAG) will boost passenger numbers on the routes between Ireland and Heathrow that are at the centre of the debate over whether Aer Lingus should be sold to its rival, according to the Irish carrier’s incoming chief executive.
Aer Lingus yesterday reported that a once-off payment of €192 million to end a dispute over its pension scheme left it with a €111.5 million loss last year.
However, excluding that, the airline’s businesses made a €72 million profit.
Following the results’ publication, chief executive designate, Stephen Kavanagh, warned that a failure to accept IAG’s proposed €1.36 billion bid for the airline would be “an opportunity forgone”.
He argued that a sale to the group, owner of British Airways and Spanish airlines Iberia and Vueling, would actually boost traffic on the routes connecting Irish airports with Heathrow that opponents of a deal fear would be lost if a sale goes ahead.
The Heathrow services are seen as critical to the State’s links to tourism and investment markets. Mr Kavanagh said if the sale goes through IAG’s airlines and its partners would begin selling tickets on these routes.
Selling our seats
“We are confident that all of the Aer Lingus network will be positively impacted because there will be more people selling our seats, and there will be more customers viewing what we have for sale.”
Last year the number of people that flew between Shannon and Heathrow fell by 22,000 to 233,000.
Mr Kavanagh said this was as a result of Aer Lingus’s own decision to launch two daily transatlantic services from the Co Clare airport. Most of the traffic from there to the London hub was destined for North America, so some passengers simply switched to the direct service.
He said the London route could be opened up to a bigger market if Aer Lingus were to become part of IAG as British Airways, the group’s US partner American Airlines and members of the broader Oneworld Alliance would all sell Shannon-Heathrow.
The Aer Lingus board has already backed IAG’S proposed €2.55 a share offer for the Irish airline. Mr Kavanagh and chairman Colm Barrington last week publicly argued the case for the deal to TDs and Senators.
IAG’s primary aim is to cash-in on Dublin’s position as a hub for travel between Europe and North America.
Aer Lingus is already growing this; around one third of its passengers on transatlantic routes out of Dublin are transferring from airports in Britain and Europe.
The airline carried a total of 1.3 million passengers across the Atlantic in 2014, 24 per cent more than in 2013. About 76 million flew between Europe and North America last year, which means that Aer Lingus has less than 2 per cent of the overall market.
The company believes it can carve out a bigger share of that market for itself by cashing in on Dublin and Ireland’s geographic position and other advantages such as the fact that passengers can clear US customs and immigration at the Republic’s airports before travelling to the US.