Aer Lingus is on course to join British Airways as part of IAG in the autumn, after speculation surfaced that the European Commission will rubber stamp IAG's €1.36 billion takeover bid for Ireland's flag carrier by next Wednesday.
Ryanair, which owns 29.8 per cent of Aer Lingus, also said it will accept the offer from IAG, removing the last major corporate obstacle to the deal.
Ryanair will vote in favour of the deal at an extraordinary general meeting of Aer Lingus shareholders on Thursday, clearing the way for Willie Walsh’s IAG to tie up the deal in the next few months.
Brian Hayes, a Fine Gael MEP, yesterday said he would be "very surprised" if Margrethe Vestager, Europe's competition commissioner, doesn't give conditional approval for the takeover next week.
He released details of a letter she sent to him, in which she stated that the commission is “generally in favour” of airlines consolidation, provided consumers do not suffer in terms of price or quality of service.
He said the commissioner had noted guarantees given to the government by IAG in relation to maintaining Aer Lingus’ connectivity between Ireland and London Heathrow.
The Government, which owns 25 per cent of Aer Lingus, will also vote in favour of the deal on Thursday.
“The guarantees that are in place mean that Aer Lingus’ existing slots will be maintained and schedules between Ireland and Heathrow will be retained for a set period of time,” said Mr Hayes. “I would be very surprised if the decision [from the commission] is negative.”
Reuters reported on Friday that the commission will give conditional approval for the merger next week after IAG made a number of concessions on competition grounds.
These are thought to include commitment to offload some of its Heathrow slots and also to enter into pricing agreements with IAG’s long haul rivals for certain connecting flights, such as those originating on an Aer Lingus route.
The latter commitments is being seen as an attempt to mollify opposition from IAG's rival, Virgin Atlantic, which was worried that IAG would roll back on Aer Lingus's existing agreements with long haul partners.
In a statement to the Irish Times, Virgin said: “If the tie-up proceeds, regulators must be confident that long-term safeguards are in place to protect the competitive benefits for consumers that connectivity with non IAG carriers deliver today.”
Virgin said those safeguards would help to protect competitive ticket pricing and connectivity between Ireland, Britain and further afield.
It is expected that once IAG gets conditional from Europe and Aer Lingus shareholders back the deal, management from both companies will move quickly to tie up the deal.
IAG wants to use Dublin as a transatlantic hub, and has promised to grow services and jobs at the Irish airline.
Shares in Aer Lingus, IAG and Ryanair all surged as investors absorbed the news that the deal is almost over the line. IAG was ahead by more than 3 per cent, Aer Lingus was up almost 2.3 per cent, while Ryanair rose close to 2 per cent.
