The acquisition of Aer Lingus by British Airways parent International Airlines Group (IAG) should benefit passengers in the UK regions, say analysts.
IAG and Aer Lingus announced agreement on a €1.35 billion takeover on Tuesday following the Irish government’s agreement to sell its 25% stake in Aer Lingus.
Aviation analyst Gerald Khoo, of Liberum, said in a note to clients: “We expect IAG to accelerate development of the existing Aer Lingus strategy focused on adding new routes and capacity on North Atlantic routes, filling this with connect traffic from the UK regions in particular.”
IAG chief executive Willie Walsh said one of his aims in acquiring Aer Lingus was to reinforce the group’s already strong position on transatlantic routes.
Walsh told analysts: “I make no apologies for the fact this will strengthen our position.”
The deal remains subject to agreement by Ryanair to sell its near 29.9% stake in Aer Lingus and also requires approval from Europe’s competition authorities.
BA already controls more than half the take-off and landing slots at Heathrow and may be required to offer ‘remedies’ for the deal to go through.
Ryanair boss Michael O’Leary built a large stake in Aer Lingus as he sought to buy the carrier, but a Ryanair takeover was opposed by the Irish government and repeatedly vetoed by Europe.
Walsh secured the deal by guaranteeing to use Aer Lingus’ 23 pairs of take-off and landing slots at Heathrow for services to Ireland for the next seven years.
He also pledged to create 150 jobs at Aer Lingus by the end of next year and expand the carrier’s fleet.
IAG has suggested Aer Lingus could carry an additional 2.4 million passengers by 2020.
Walsh declined to say what revenue or cost benefits he expects from bringing Aer Lingus into IAG alongside BA, Iberia and Vueling.
But he said the merger of BA and Iberia had resulted in revenue and cost synergies “well in excess of what we believed possible”.
BA currently operates to Dublin five times a day from Heathrow, with three of the services at similar times to Aer Lingus flights meaning they could be combined to free slots to serve other destinations.
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