Etihad Airways is reportedly interested in acquiring the Irish Government’s 25.1% ownership stake in Aer Lingus, according to Gulf News reports. The deal is reportedly provisional on the Irish Government underwriting Aer Lingus’ EUR300 million pension deficit via a bond issue through Ireland's National Asset Management Agency (NAMA). Ryanair already controls 29.4% of Aer Lingus. Etihad Airways had no official comment on any prospective deal with Aer Lingus, although CEO James Hogan confirmed in an earlier interview with Bloomberg the carrier has looked at taking a stake in Aer Lingus, even though the “pension issues” would have to be evaluated.
Etihad Airways interested in Irish Government’s stake in Aer Lingus: report
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Brexit follow-up Part 3: Gulf airlines, Turkish lose UK ally in M/E talks as protectionism spreads
The Brexit referendum produced a vote for the United Kingdom to leave the EU, although this process has not yet been formally invoked. In the scope of aviation, one outcome is the potential loss of the UK in shaping air service agreement negotiations. The UK has been a liberalising voice, one that often counterbalanced more protectionist views from France and Germany. The UK is often able to galvanise the smaller EU states too.
The EU now has mandates to negotiate open skies with states, including the UAE, Qatar, Turkey and the ASEAN bloc. The UAE and Qatar, home to the three Gulf network airlines, are expected to produce the most contentious negotiations. France and Germany will surely takes cues from Air France and Lufthansa to impede Gulf growth. In this light there are questions about whether the talks are genuinely motivated, or merely designed to draw out the discussion and thereby not produce any additional traffic rights while under negotiation.
What Air France and Lufthansa need is a real, lasting solution, rather than persevering Canute-like with stonewalling. Although a partnership seems logical, they may have waited too long. The Gulf airlines have found that they can succeed on their own.
IAG Group: Vueling is stalling, but Aer Lingus helps to grow 2Q profits. 2016 outlook lowered
IAG increased its 2Q2016 operating profit modestly, but only because Aer Lingus boosted this year's numbers (it was not in the group in 2Q2015). The quarter was affected by externalities: negative currency impacts and softer demand conditions resulting from terrorism, the Brexit vote, macroeconomic weakness in Latin America and air traffic control strikes in Europe. The resultant deteriorating unit revenue trend was offset by lower unit costs, mainly due to lower fuel prices.
Three of IAG's four operating airlines improved their margin in 1H2016 but Vueling's declined, since the external disruption affected it the most. Vueling's operating margin has been on a downward trend since its acquisition by IAG in 2013. Its capacity growth plans for FY2016 have now been trimmed, also scaling back the group's growth for the year.
IAG now expects 2016 operating profit growth of a low single-digit percentage, much less than the 40% increase previously anticipated but still an increase. This outlook is more positive than that given recently by Lufthansa, which expects a fall in profit this year. Moreover, IAG remains a higher margin group than either of Lufthansa or Air France-KLM, and should be better placed if there is to be a full-scale downturn.