Walsh rules out Aer Lingus bid; confirms interest in BMI and TAP
17.09.11
Willie Walsh, the boss of British Airways and Iberia's parent IAG, has ruled out bidding for his former employer, Aer Lingus, but confirmed interest in BMI and Portugal's TAP, the Guardian reports today. Mr Walsh also said the government's decision not to proceed with the third runway at Heathrow because of environmental concerns was ‘laughable’ when a countries such as China were building 100 new airports.
Speaking at the London Irish Business Society in London on Thursday night, he said he wanted to create £400m in ‘synergies’ within 5 years through cost savings and new revenues and wanted to turn the company into a ‘multinational, multi brand’.
Mr Walsh said he was not interested in Aer Lingus because of its €400m (£350m) pension deficit. The Irish government is under pressure to sell its 25% stake as part of the IMF / EU bailout. Officially the airline is not for sale, but it is on a list of state assets that could be sold and the government is said to have privately decided its stake is no longer of strategic interest. However, it is concerned that its slots at Heathrow be maintained – they are a vital lifeline to Ireland's export economy – and that the airline should not be sold at fire sale prices. The airline is worth just €93m at the current €0.67 share price.
He said he believed the airline was not in a fit state for any buyer because Aer Lingus, which has cash reserves of €385m, is not legally responsible for the deficit, so a buyer would have to take on the obligation – though some lawyers think Aer Lingus could be forced to pay into the fund.
‘I know a lot about pension deficits – there's one thing you don't want to do and that's go looking for one. While that uncertainty exists, it's not going to be easy for anybody to progress the sale of Aer Lingus. The uncertainty is definitely going to discourage people from looking at Aer Lingus. There's plenty of other things I can be doing, so I'm not going to waste any time thinking about what might happen when you have airlines like TAP in play.’
He said IAG was in acquisition mode. It is not going to be ‘rushed’ or ‘driven by predetermined deadlines’ but ‘by getting the right airlines at the right time for IAG. We have made no secret of our interest in BMI and no secret in the merit of looking at TAP.’
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