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IAG Said to Make Long-Haul Pledge in EU Review of Aer Lingus Bid

Published on Jun 26 2015 2:13 PM in General Industry tagged: Aer Lingus / IAG

IAG Said to Make Long-Haul Pledge in EU Review of Aer Lingus Bid

British Airways parent IAG offered to connect passengers from Ireland with rivals’ long-haul flights out of London in an attempt to allay European Union antitrust concerns over its bid for Irish carrier Aer Lingus Group, according to two people with knowledge of the matter.

The concession is designed in particular to assuage Richard Branson’s Virgin Atlantic Airways, which has expressed competition concerns about the deal, according to the people, who asked not to be identified, as the talks are ongoing. IAG has not made any offer to surrender London Heathrow slots of the combined group, said the people.

Buying Aer Lingus would win IAG scarce take-off and landing positions at Heathrow, Europe’s top hub, where British Airways is the No. 1 carrier, as well as opening up trans-Atlantic routes via Ireland. IAG agreed to buy Deutsche Lufthansa AG’s BMI unit in 2011 to gain slots.

The European Commission said on Thursday that International Consolidated Airlines Group SA had offered competition remedies to help win approval for its planned €1.35 billion deal.

The EU’s competition regulator extended its preliminary deadline to review the accord to 15 July. The concession would build on IAG’s pledge in 2012 to feed competitors’ long-haul flights from Heathrow as it secured the EU’s backing for its takeover of BMI.

IAG said it’s engagement with the Brussels-based commission is ongoing and declined to comment further. Virgin Atlantic said its position hasn’t changed and that guarantees need to be made to ensure IAG works with Aer Lingus’ existing partners. The commission declined to comment.

The EU will seek industry feedback on the IAG’s concessions, one of the people said.

IAG made its first indicative offer for Aer Lingus in December. It took the company a further five months get the Irish government’s backing, amid negotiations over jobs, the future of Aer Lingus’s Heathrow slots and routes from Ireland to London.

EU officials raised no major objections in May on state-aid grounds to IAG’s pledge to maintain Ireland-to-London routes for seven years to win the state’s 25 per cent Aer Lingus stake, people with knowledge of the informal discussions said at the time

Ryanair, which owns almost 30 per cent of Aer Lingus, hasn’t said whether it supports the IAG deal. Earlier this month, the UK’s Competition and Markets Authority said that it still required Ryanair to cut its Aer Lingus stake to no more than five per cent.

News by Bloomberg, edited by Hospitality Ireland

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