Aer Lingus 'to accept' bid from British Airways owner IAG

Irish airline Aer Lingus is set to approve a new takeover bid by British Airways owner IAG, the BBC understands.

IAG, which also controls Iberia in Spain, has submitted a fresh offer - which could be approved this week - of around €2.50 (£1.87) per share.

The deal, which values Aer Lingus at about €1.3bn (£971m), could face political hurdles as the Irish government owns 25% of the airline.

The firm, in which Ryanair has a 29.8% stake, rejected two IAG bids last year.

By acquiring Aer Lingus, IAG would gain more take-off and landing slots at Heathrow Airport - valued at around £30m per pair - allowing it to operate more flights.

Aer Lingus is the fourth busiest operator at Heathrow behind BA, Lufthansa and Virgin Atlantic.

However, opposition Irish MPs have called on the Irish government to veto any takeover bid, which might cede control of the national carrier.

A senior government source told the BBC: "The issue of landing slots at Heathrow airport is crucial for the Irish government and was discussed at a parliamentary party meeting on Weds.

"You have to have flights from Dublin and Cork into a major hub and the Irish government would drive a hard bargain."

The Irish cabinet is due to hold its weekly meeting on Tuesday, where the issue is likely to be discussed.

Aer Lingus employs almost 4,000 people, with about 2,100 of these based in Dublin.

On Sunday, the Impact trade union, which represents many Aer Lingus staff, wrote to the government urging it to keep a stake in the airline to preserve job security.

A takeover "represents a significant risk to the security of employment for Irish workers employed directly or indirectly by Aer Lingus," said Matt Staunton, Impact's national secretary.

Mr Staunton believes about 1,200 jobs could be under threat from a takeover.

After suffering badly during the global financial crash, the Irish airline's fortunes have been improving under chief executive Christoph Mueller, who is leaving to take up the helm at struggling Malaysia Airlines.

Aer Lingus recently reported its strongest summer trading for several years, with operating profits up 19% to €112.9m (£88.5m) in the three months to 30 September.

The airline has plans to launch a new Dublin to Washington service in May, and increase services on existing transatlantic routes.

Aer Lingus is well known to IAG's chief Willie Walsh, who ran the airline between 2001 and 2005 before becoming chief executive of BA.

A spokesman for rival Irish carrier Ryanair said if it received an offer for the airline "the board will consider it".

Ryanair built its stake in Aer Lingus during a failed attempt to buy the airline. Competition authorities ruled that a takeover might distort the market in flights between Dublin and the UK.

IAG and Aer Lingus both declined to comment.

For Ryanair, any takeover of Aer Lingus by IAG is about the money, for BA it is about the landing slots at Heathrow airport, and for the Irish government it is all about jeopardising the main transport link into an island economy.

From a purely business point of view it makes sense for the deal to proceed once a decent price has been agreed.

But it will really struggle to get political blessing in Dublin - especially a year out from a general election.

The Irish Labour Party will resist the sale, while the centre right Fine Gael party will only approve it if connectivity from Cork and Dublin into what it sees as Britain's only hub airport is maintained.

The prize for BA and Iberia in owning Aer Lingus is huge.

They could open up all sorts of interesting route options for both airlines such as flights to large rapidly developing but poorly served cities in the Far East.

Ireland may fear that the Aer Lingus brand could go the same way as BMI - into the history books