THE Irish Government priced the float of Aer Lingus for a successful take-off yesterday, valuing the company between €1.1 billion and €1.3 billion (£750 million and £890 million).
The offering, priced at €2.10 to €2.70 per share, was at the bottom end of expectations and the company was considered “priced to go” by analysts, who said that a multiple similar to that on which British Airways trades had been used, rather than the very high multiple on which Ryanair, the budget airline, trades.
Martin Cullen, the Irish Transport Minister, described the move as a milestone. “This initiative is very important to the company and Ireland because it will give Aer Lingus the commercial freedom and access to capital it needs to succeed,” he said.
The flotation has been mired in controversy for the past three years and the Government is anxious to avoid a flop. Unions at the airline oppose the privatisation, fearing that it threatens the job security of members.
Dublin will keep a 25.1 per cent stake in the airline, selling 72.7 million shares, while 208.4 million new shares will be issued.
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The final share price will be set on September 27, with trading beginning in Dublin and London on October 2.
Aer Lingus is expected to use the net proceeds of the offer to finance the expansion and replacement of its fleet. About €104 million will be used to plug a gap in Aer Lingus’s pension fund.