The Irish government has long threatened to sell its stake in Aer Lingus which is currently at 25.1%.  In fact, that intention seems to get announced annually while no action is really taken on the part of the government to actually engage in the sale.

A number of airlines have expressed at least some interest in acquiring the stake although those same airlines also express concern about the pension obligations that Aer Lingus has presently.  Most would prefer to see the Irish government get those obligations settled before a sale takes place in order to avoid the risk that the airline may be financially impacted by them sooner than later. 

Airlines such as Ryanair, who already owns 29.4% of Aer Lingus, as well as Qatar, Etihad and even JetBlue appear to have expressed strong interest in the airline stake.  I regard Ryanair as a very unlikely candidate simply because I think the Irish government has no desire to see the two airlines consolidated and, frankly, because Ryanair CEO Michael O’Leary already pisses them off regularly as it is.

Qatar and Etihad are interesting candidates and may well throw their hats into the ring but there is the issue of foreign ownership of the airline.  It is unlikely they would be permitted to acquire much more of a stake in the airline and, as a consequence, they’ll be unlikely to influence the airline’s operations as much as they may want.

JetBlue seems also unlikly for reasons having to do with the fact that JetBlue isn’t an international airline, not really, and its knowledge of the European marketplace is limited to say the least.  They do benefit from an existing close relationship with Aer Lingus but that can only go so far for JetBlue. 

One other entity sometimes considered is International Airlines Group, holding company for British Airways and Iberia Airlines.  That group is engaged in purchasing BMI presently and hasn’t stated a preference for Aer Lingus publicly.  However, IAG CEO Willie Walsh is a former Aer Lingus executive who knows the airline, knows the government and knows european airlines.  If the BMI purchase were to fall through or be impacted by regulatory requirements, I would not be surprised to see them turn their attention to Aer Lingus.

At the end of the day, I don’t think the Irish government really wants to sell its holdings.  The airline still operates as the flag airline of Ireland and its a source of pride for a country who feels strongly about representing itself internationally.  I think they like talking about the sale but I think no one wants to explore the political impact of such a sale very seriously.  It’s safer to hold onto the shares than suffer consequences in the voting booths.

As for Aer Lingus itself, I think they would like the government to help out with the pension obligations and then have the freedom to operate with less political influence than they currently experience.  That said, Aer Lingus has struggled more often than not to earn a profit and few see the carrier as a strategic purchase.  The airline needs better strategic relationships with other airlines and it is difficult to get those into place when the Irish government yields a heavy influence on the airline’s operations.

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