The Irish government has given clearance for a takeover bid of its 25.1% stake in Irish airline Aer Lingus by British Airways parent company IAG (International Airlines Group), Irish Minister for Transport Paschal Donohue announced yesterday.

If successful, the takeover will mean big changes for Aer Lingus – including the potential of four new transatlantic routes – with two likely introduced next year - as well as 160 new jobs by 2016, with the potential addition of 635 new jobs by 2020.

The deal also guarantees Aer Lingus’ slots at Heathrow Airport for minimum of five years, and its daily routes between Dublin, Cork, Shannon and London for seven years.

The Dublin to London route is one of the busiest inter-city air routes in Europe.

Aer Lingus’ brand will be protected and its headquarters will remain in Ireland per a legally binding commitment, the Irish Times reports.

Following a Cabinet meeting on Tuesday, Donohue stated: “IAG has provided additional information and certain commitments in relation to its proposal. Following detailed consideration of this and all of the issues surrounding a potential disposal of the state’s shareholding in Aer Lingus, the government has decided that it will support IAG’s proposal.”

The Cabinet’s proposal will go before the Dáil (Irish parliament) today.

Aer Lingus recommended in January that the company would likely be sold to IAG for $1.57 billion (€1.4 billion).

After months of negotiations, the Irish Cabinet has now come forward with its support of the deal.

As Donohue noted, “This proposed offer has been the subject of very detailed discussions and negotiations with IAG since the board of Aer Lingus indicated on 27 January that it was prepared to recommend the offer. The government has secured important guarantees in respect of Ireland’s future connectivity, particularly to London Heathrow, and on the maintenance of Aer Lingus’ iconic brand and of its head office in Ireland.

Prior to the January announcement, IAG, headed by Willie Walsh – a former Aer Lingus CEO who started his career as an Aer Lingus pilot – had made two previous attempts to buy Aer Lingus.

IAG was created in 2009 through the merger of British Airways and Spanish airline Iberia, and is headquartered in London.

Aer Lingus’s two main shareholders are rival Irish airline Ryanair (29.8% stake) and the Irish government (25.1% stake). The sale will have to be agreed by the shareholders and will also need regulatory approval before closing.

Fáilte Ireland, Ireland’s national tourism development body, welcomed the government's acceptance of the revised deal for the sale of Aer Lingus to IAG as a positive outcome supporting the long term development of Irish tourism.

Commenting yesterday, Fáilte Ireland CEO Shaun Quinn emphasized "As an island nation, air access is the lifeblood of Irish tourism and today's developments offer greater certainty regarding Aer Lingus' long term sustainability and, consequently, the continued growth of our tourism industry. I am particularly pleased to note that IAG are committing to an additional eight transatlantic planes based out of Dublin. Given the recent performance of the North American market, this will provide us with the increased access to capitalize on the significant potential to attract even greater visitor numbers from the USA to our shores."

Union leaders in Ireland, including SIPTU, IMPACT and the Irish Congress of Trade Unions, have expressed concern over a lack of detailed assurances in the deal for current jobs.

Aer Lingus chairman Colm Barrington called the deal “compelling," adding that it would “lead to an increase in jobs at Aer Lingus, in support activities and the tourism sector, and, importantly, will strengthen connectivity to and from Ireland.”

What do you think of IAG taking over Aer Lingus? Share your thoughts in the comment section, below. 

H/T to The Irish Times; The Guardian

The possible Aer Lingus sale to British Airways...but will it actually ever happen.Photocall

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