The Aer Lingus flotation may now be shelved until next summer, according to Government sources. The enabling Bill for the Aer Lingus initial public offering (IPO) has been delayed to December and may be postponed until the new year.
The legislation was originally to have begun its passage through the Oireachtas last month, but the Minister for Public Enterprise, Ms O'Rourke, is understood to have told the Government Whip's office to tentatively schedule it for December. The Minister has warned the office - which is responsible for organising Dail business - that she may wish to put it back further. Ms O'Rourke is unlikely to relish the prospect of a series of Dail debates on the Aer Lingus legislation while the company is gripped by an industrial relations crisis. A spring flotation looks improbable even if the Aer Lingus Bill starts its passage through the Dail in December. It will take up to four months to complete the process, not including the Christmas recess. If the Bill starts in the Dail in late January or February, the IPO will be delayed even further.
It is possible that it could move faster if the political will is there, but this is unlikely in the current environment. The Bill must be passed by both Dail and Seanad before the flotation can proceed. The Government's enthusiasm for the project has waned considerably in recent months following the eruption of widespread industrial unrest at the company. The issue had been moving steadily down the Government's agenda following the collapse in the value of Eircom shares to below the €3.90 level at which the former State telecommunications company was floated off last summer. Sources close to the flotation said a spring flotation could not be ruled out, but conceded that next summer at the earliest, was looking increasing likely. Aer Lingus management would prefer to go to the market in the spring. Missing that deadline will constitute a second postponement. Much of the preliminary work for the flotation is under way. Schroder Salomon Smith Barney and AIB have been appointed global co-ordinators and lead managers while Credit Suisse First Boston and Davy Stockbrokers have been selected as joint lead managers. The Government hopes that by next summer the industrial relations situation will have improved. The proposed break up and sale of Eircom to Vodafone and a consortium led by Mr Denis O'Brien should also see some value returned to Eircom shareholders. About 500,000 small investors who took part in the biggest sale of State assets are nursing losses. The industrial relations difficulties at Aer Lingus are expected to take several months to resolve. The company faces pay claims from its cabin crew, pilots, baggage handlers and also clerical and catering staff. Meeting the claims would cost the airline - which made pre-tax profits of £59.5 million - an additional £200 million a year.
