IAG (Parent of BA & Iberia) Purchase Of Aer Lingus Cleared By EU

European Union regulators have approved the IAG’s (the parent of British Airways, Iberia & Vueling) purchase of Aer Lingus with some concessions.

Air Lingus AIG

The Irish government has been backing the deal and the Ryanair indicated last week that they would be willing to sell their share of the airline (just short of 30%) to IAG.

You can read more about this development on BBC (access here), on Financial Times (access here) of which beloe is an excerpt or on Wall Street Journal (access here).

International Airlines Group’s €1.4bn takeover of Aer Lingus cleared its final hurdle as the European Commission gave its approval of the purchase.

The commission’s assent depends on concessions that IAG has agreed to make on routes from London to Ireland. The move brings to an end a near seven-month campaign by Willie Walsh, the former pilot who runs the parent of British Airways and Iberia, to win control of the Irish carrier.

Mr Walsh has already secured the backing of the Irish government for the takeover and for the sale of the Irish state’s 25 per cent stake in Aer Lingus. Meanwhile, Ryanair, which owns nearly 30 per cent of its rival Irish carrier, said last week that it was ready to sell its holding to IAG.

Conclusion

In the long run this is bad for the competition as the airline is likely to join the transatlantic JV with British Airways, Iberia, Finnair, and American Airlines that allows them to co-ordinate pricing and capacity. The less competition higher the prices.

I would expect Aer Lingus to move to Avios loyalty currency used by both BA and IB at some and may be even back to the Oneworld Alliance of which it was part of until March 2007.

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