IAG’s interest in Aer Lingus, which was first made known in December 2014, has culminated in the EC approving their offer of €1.4bn (US$1.5bn) for the Irish flag carrier. The approval comes just four days after a minority shareholder in the company, Ryanair, accepted an offer from IAG for their 29.8% holding as IAG were not interested in having a large minority shareholder involved. The deal would seem beneficial for Ryanair, who confirmed their investment in Aer Lingus will now show a “small profit”, as they had been subject to a competition case that ended with the airline being ordered to reduce its stake in Aer Lingus to a maximum of 5%. However the deal has come at a cost to IAG with regard to sacrificing valuable slots to appease the EC’s concern over Aer Lingus having too big a competitive advantage.
The EC approval of IAG’s acquisition of Aer Lingus has been made subject to the carrier relinquishing five slot pairs at London Gatwick Airport. The Commission made it clear it required “significant concessions” on routes from London to both Dublin and Belfast for the acquisition to proceed, saying “The Commission had concerns that the merged entity would have faced insufficient competition on several routes.” Those specific routes identified by the Commission were Dublin-London, Belfast-London and Dublin-Chicago.
Of the five daily slots IAG have sacrificed to meet with the Commission’s demand, two of these must be used to serve Dublin, with a third one reserved for Belfast flights. The other two pairs may be used optionally for Dublin or Belfast. In addition, the Commission made it abundantly clear Aer Lingus will have to continue accepting connecting passengers from rival airlines at Amsterdam, Dublin, Gatwick, Heathrow, Manchester and Shannon. The Commission also confirmed that “These commitments adequately address all competition concerns identified by the Commission. The Commission therefore concluded that the proposed transaction would not significantly impede effective competition in the European Economic Area or a substantial part of it.”
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AviTrader Publications Corp.
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