From today's Sunday Times:
AER LINGUS is just four weeks from
being wound up after British Airways and a number of other potential investors turned down its pleas for cash.
Sources close to Rod Eddington, the BA chief executive, said that he met the Irish airline in London last week and told it he would not invest at present.
Aer Lingus directors say the company is on the verge of liquidation unless the unions agree to redundancies or the Irish government can persuade the European Union to relax its rules on state aid.
The board of the government-owned carrier was told on Thursday that nobody was intrerested in investing.
With no sign of a "white knight" investor and severe restrictions on the amount the government can inject, industry sources say
the company's only chance of survival is an early agreement with the unions on laying off 2,000 of its 6,200 workers.
However, a deal is unlikely as, according to Irish government sources, workers will receive only slightly more than Ireland's
statutory redundancy entitlement. This means that some workers with 20 years' service could receive little more than £3,000.
Senior union sources in Dublin said this weekend that workers "will burn the building" rather than accept the redundancy package. They had expected to get as much as £90,000.
Aer Lingus had hoped that BA might fly to its rescue but Lord Marshall, chairman of the British airline, told The Sunday Times that it is unlikely to take a stake.
Marshall was sceptical about any possible investment. He said Eddington met Aer Lingus but added that BA had been constantly approached by other airlines since the September 11 attacks on America.
He said: "The Irish government has approached, directly and indirectly, several parties, including us. Rod spoke to Aer Lingus in the context of a One World alliance meeting in London. But we would have to be very, very careful before we make any investment or take any interest in any other carrier in the current climate. It depends on what is on offer on what terms and at what price."
It is generally accepted that Aer Lingus will face liquidation if a rescue plan is not implemented. At a bleak board meeting on
Thursday, directors were told they had four weeks to put the company's survival plan into action or face insolvency.
Government and Aer Lingus sources have dismissed suggestions this week that a consortium of Irish businessmen may be interested in taking a strategic stake in the airline.
Non-Irish investors are, in effect, blocked from taking a majority stake in Aer Lingus under the terms of the US-Ireland agreement that allows Aer Lingus to fly into America. Although the agreement prohibits only non-Irish concerns from taking more than 49% of the airline, Aer Lingus sources this weekend said it was unlikely that the US Department of Trade would allow non-Irish interests to take more than 25%.
The EU has ruled out state aid to the airline, which is losing £2m a day, leaving the future of Aer Lingus in the hands of the
unions. Negotiations over redundancies are now the main obstacle to the company's survival.
Any attempt to use public money to save Aer Lingus would not only require a volte face by the EU but would also be met by a legal challenge from Ryanair. The Dublin-based regional airline CityJet, which is a subsidiary of Air France, has also said it
would oppose state aid to Aer Lingus.