Aer Lingus float given all clear

The Irish Government has finally set in motion a €1.2 billion ($2.4 billion) flotation of its national airline, Aer Lingus, yesterday unveiling plans to list the company on the London and Dublin exchanges before the end of next month.

The Government, which owns 85.1 per cent of the airline, will hold on to a minority shareholding of 25.1 per cent, but will cash in the remainder of its stake. Aer Lingus' employees currently own the remaining 14.9 per cent of the company.

The airline reportedly wants to raise between €400 million and €500 million, and is aiming to ensure that at least 50 per cent of the shareholder base - including the Government - remains Irish. Retail investors on both sides of the Irish Sea will be invited to participate in the float, but subject to a minimum subscription of 10,000. An extra one share will be awarded for every 20 which are still held by retail investors a year after the float.

The company intends to use the proceeds to expand its fleet, as well as to pay down some of its pension deficit. Although management has been engaged in a long-standing row with unions over its pension fund - insisting that it has no contractual obligation to fund the deficit - it has finally conceded to pay about €100 million to the scheme.

The float brings to an end a protracted dispute with the Irish Government, which insisted only three years ago that it would never consider selling the airline.

Transport Minister Martin Cullen said yesterday: "This is the right decision for the company, its employees, customers and Ireland, and it is taking place in order to give Aer Lingus both the commercial flexibility and the financial strength to succeed in what is a highly competitive global marketplace."

In spite of agreeing to inject funds into the pension scheme, the airline has not yet managed to defuse its row with unions, which oppose the carrier's float on the grounds that it may threaten the job security.

Christy McQuillan, the branch organiser of the Irish union SIPTU, said: "The Government's decision is not in the best long-term interests of the country, the travelling public or the workforce, and is a grave strategic error and bad value.

"The Taoiseach, Bertie Ahern, should at this stage appraise himself more fully on the serious factors at stake. Ultimately he has the final opportunity to decide not to press the 'destruct button' on a national airline which the country vitally needs now and into the future."

The company plans to issue the prospectus, along with its initial price range, during the second week in September. The float is scheduled to take place before the end of the month.

The airline's chief executive, Dermot Mannion, brushed aside the suggestion that the current instability in the airline industry meant that September would be a bad time to float.

"The airline industry is the ultimate long-term industry," he said, adding that the sector had already shown its mettle by surviving a series of difficult times.

- INDEPENDENT