In late January I posted about IAG’s bid to take over Aer Lingus. IAG is the parent company of British Airways, Iberia, and Vueling, and is one of the three European airline “superpowers.”
However, the ownership of Aer Lingus was a bit complicated, given that Ryanair owns ~30% of Aer Lingus while the Irish government owns 25%. The biggest challenge there seemed to be getting Ireland to accept the bid, given the politics involved.
Well, that has finally happened, and Ireland’s government has agreed to sell their 25% Aer Lingus stake to IAG. This comes after two unsuccessful takeover bids last year. What remains to be seen is what Ryanair will do with their stake in Aer Lingus. Via BBC:
Ryanair chief executive Michael O’Leary recently said his company would consider any offer from IAG.
A spokesperson for Ryanair, which owns a 29.8% stake in Aer Lingus, said on Tuesday: “The board of Ryanair has yet to receive any offer, and will consider any offer on its merits, if and when an offer is made.”
While it’s a long read, here’s the press release with the details of the takeover bid, now that it has been approved.
One of the Ireland’s major worries was that British Airways just wanted Aer Lingus for their Heathrow slots, which are extremely valuable. However, as part of the agreement, the Heathrow slots will continue to be used for Aer Lingus flights for a period of at least five to seven years:
- Aer Lingus will continue to hold its existing slots at London Heathrow
- Aer Lingus will operate (i) its current daily winter and summer scheduled frequencies between London Heathrow and Dublin, Cork and Shannon for at least seven years postacquisition, and (ii) in the first five years post-acquisition, its other London Heathrow slots on routes to/from airports on the island of Ireland
It’s smart of Ireland to protect their interests in that way.
Also, while it’s not surprising, Aer Lingus will continue to be run separately and have their headquarters in Ireland:
- Aer Lingus will operate all of its scheduled international air transport passenger services under the Aer Lingus brand, and maintain Aer Lingus as its registered name and its head office and place of incorporation in the Republic of Ireland
Furthermore, as originally speculated, Aer Lingus will be joining the oneworld alliance and the oneworld transatlantic joint venture, which is exciting for frequent flyers:
IAG’s ambition to develop Aer Lingus’ long haul capacity will be supported through an enhanced connectivity with other IAG carriers, the inclusion of Aer Lingus within the oneworld alliance, of which British Airways and Iberia are key participants, and through Aer Lingus joining the joint business agreement that IAG operates over the North Atlantic with American Airlines and Finnair (the “North Atlantic Joint Business”)
Bottom line
As a oneworld frequent flyer, I’m excited about the implications of this takeover, both in terms of Aer Lingus joining the oneworld alliance, as well as them joining the transatlantic joint venture.
How do you feel about IAG’s Aer Lingus takeover?
Given that Etihad have said they will back the offer, IAG only need 21% of the other shareholders to sell them their shares to force Ryanair to toe the line, It's a done deal, assuming the Irish parliament agree. Of course the European Parliament could get in the way...
So we'll go from 25k points RT in economy to 25 points RT in economy, plus $800 in fuel surcharges after BA gets their greedy mitts on EI. Or 100k+ and $800 YQ with AAdvantage points. Mergers and acquisitions always screw over the consumer. ALWAYS.
@mike
It's pretty normal for major airlines budget subsidiaries not to be part of the alliance, due to the costs of complying with alliance policies among other things. Germanwings is not part of *A, Jetstar is not part of Oneworld the only difference is curling is that BA/IB status means nothing on Vueling. LH status gets you something on Germanwings, QF status gets you something on JQ.
As an Irish citizen Im not sure what to make of this. The guarantee's are good, yes, but seven years is no time at all.
Why is this good news for frequent flyers exactly? Once EI joins the transatlantic JV with AA/BA/IB/AY you can certainly kiss the reasonable ex-DUB fares to NYC/LAX/HNL goodbye. Heck, get ready for 900$+ Y fares to DUB ex-US as well year-round. EI joining oneworld will offer only marginal incremental benefits to US frequent flyers, at least on the redemption front. You could always redeem UA (Star) miles or BA Avios (oneworld) for EI flights up...
Why is this good news for frequent flyers exactly? Once EI joins the transatlantic JV with AA/BA/IB/AY you can certainly kiss the reasonable ex-DUB fares to NYC/LAX/HNL goodbye. Heck, get ready for 900$+ Y fares to DUB ex-US as well year-round. EI joining oneworld will offer only marginal incremental benefits to US frequent flyers, at least on the redemption front. You could always redeem UA (Star) miles or BA Avios (oneworld) for EI flights up until now and now they will only will be available to members of one alliance.
Sure would be nice if Vueling joined Oneworld too. It's strange that it's owned by IAG but isn't a member.
I've really been pulling for the merger of ANA and Aer Lingus, with their proposed slogan, "isn't it about time you tried ANALingus?"
But I guess that won't ever happen. A boy can dream.
While this might be a win for oneworld fans looking to use their points, I suppose, it's likely a negative for the broader travelling public. Aer Lingus has been one of the few more-affordable ways for leisure travelers to travel across the Atlantic to dozens of European destinations (similar model to Icelandair) and I fully expect that will cease shortly. Also, given that they'll be joining the JV, there's almost no way that they will...
While this might be a win for oneworld fans looking to use their points, I suppose, it's likely a negative for the broader travelling public. Aer Lingus has been one of the few more-affordable ways for leisure travelers to travel across the Atlantic to dozens of European destinations (similar model to Icelandair) and I fully expect that will cease shortly. Also, given that they'll be joining the JV, there's almost no way that they will maintain their policy of not charging fuel surcharges on redemptions. So in my view, this is almost purely negative from a typical transatlantic traveler perspective. Perhaps for those living in Ireland this may give them easier one-stop connections via LHR but it's not like anything which involves connecting at LHR is ever "easy".
Great british and Irish airway after 7 years?
Lucky, how long do you think it will take for Aer Lingus to join oneworld？
@ Jack Buck -- That's a great question. If I had to guess I'd say probably within a year, but I guess we'll see.
Joining oneworld isn't necessarily great if it means their partnership with UA ends as part of that.
It will be nice to have another carrier in OneWorld
My first impression is: book as many ex-DUB business class fares now as needed for the next year, as those deals are likely to end soon...
Do you expect to now have high fuel taxes attached to reward tickets?
@ BFD -- It's certainly possible, though I wouldn't count on it. For example, Iberia doesn't impose high fuel surcharges when you're booking awards on them through their own program, so it's possible Aer Lingus will remain as is. But I wouldn't count on it either.