British Airways Owner Cleared To Buy Aer Lingus

The European Commission has given the go-ahead for International Airlines Group (IAG) to complete its takeover of Irish flag-carrier Aer Lingus (LSE: AERL.L - news) .

The deal, worth €1.3bn (£940m), was awaiting the ruling from European competition authorities after Ryanair agreed last week to sell its 29.8% stake in the company.

The Irish Government had previously accepted IAG’s €2.55-a-share offer for its 25% stake.

The European Commission did, however, place some restrictions on the agreement.

In order to ensure competition in the market IAG, which owns British Airways and Iberia, will have to give up five daily slots at Gatwick - a slight variation on speculation that airline group might be required to give up slots at Heathrow.

The slots which become available as a result of the deal will be reserved for flights from Dublin and Belfast, to make sure that provision of services between London and Ireland (Other OTC: IRLD - news) are unaffected by the handover.

IAG will also be required to enter into agreements with other airlines on providing connecting flights from Ireland for transatlantic passengers.

This will prevent IAG from insisting Irish passengers use their own flights when continuing onward to America.

IAG’s plans for Aer Lingus, which is Heathrow Airport’s fourth busiest operator, include folding it into its existing Oneworld airline alliance to complement existing transatlantic services.

It has also agreed to build a new transatlantic hub at Dublin Airport as part of the takeover deal.

European Commissioner in charge of competition policy, Margrethe Vestager, said: "By obtaining significant concessions from the airlines the Commission has ensured that air passengers will continue to have a choice of airlines at competitive prices after IAG's takeover of Aer Lingus.

“The five million passengers travelling each year from Dublin and Belfast to London will be able to choose among several strong carriers.

“And we are also protecting passengers travelling on connecting flights between Ireland and the rest of the world."