A consultants’ report into the future of Aer Lingus has recommended against a full sell-off of the State airline, but suggests a partial sale through the stock market could be successful.
The Goldman Sachs report, which was delivered to Government seven weeks ago, has been published by the Department of Transport this evening.
While it does not provide a recommendation on the future ownership of the company, it does examine a series of options for Aer Lingus.
The consultants recognise that the airline is constrained by the lack of access to new capital, particularly because of the need to update its transatlantic fleet.
They say that maintaining the status quo of state ownership, with no new capital being put in, leaves the airline at a disadvantage compared to its competitors, and puts its future under threat in the event of a new shock in the industry.
A full sale of the company on the stock market is seen as unlikely due to prevailing conditions, while the new low cost business model of Aer Lingus makes it less attractive as an acquisition for traditional airlines.
In any case, according to Goldman Sachs, a complete sale would leave the State with no influence over the company's future direction.
The remaining option is a partial sale, either in a private placement or through the stock market.
A survey of investment institutions raised ‘considerable doubts’ about whether the airline could be sold to such traditional institutions, while Goldman Sachs did not believe that Irish institutions would participate in a partial purchase.
However, ‘it is possible that a wealthy individual or promoter might lead a consortium and participate’ in a partial purchase, but that would be the first step in a complete sale of the company at a later stage.
Finally, there is the option of a partial sale through the stock market, which would require both a buoyant equity market and a successful period in the airline sector, making the possible window for a sale shorter than for many other types of company.
Despite this, Goldman Sachs believes that Aer Lingus ‘has the necessary attributes’ for a successful sale, and recommends that if this approach is chosen, the necessary preparatory work should be undertaken so the company can access the market when conditions are right.
The full report can be downloaded in pdf format from the Department of Transport's website.
