Any other business

Richard Branson on IAG's Aer Lingus deal: "It's absolutely wrong"

3 min read

12 June 2015

The founder of Virgin Atlantic said International Airlines Group being permitted to buy Aer Lingus was “incredible”.

The billionaire has criticised IAG and said it was “absolutely wrong” for the owner of British Airways and Iberia to buy Aer Lingus. He argued that the Irish flag carrier should remain as an “independent competitor” to BA.

IAG had reached an agreement with Aer Lingus, following months of negotiations, to make a €1.4bn (£1bn) cash offer for the airline. The deal values Aer Lingus at €2.55-a-share. The Irish government had confirmed it was willing to sell its 25 per cent stake in Ireland’s national carrier.

At the time, indications from Brussels were that European competition authorities would not stand in IAG’s path.

Branson admitted he was displeased at the outcome, though also conceded Virgin Atlantic had “considered” buying Aer Lingus too. Virgin Atlantic is 51 per cent owned by Virgin Group, with the rest held by US airline Delta.

Virgin had partnered with Aer Lingus to operate a short-haul operation in Britain called Little Red, but it was scrapped after struggling to fill seats and facing competition from BA.

Branson said: “I find it incredible that the competition authorities allow such things to happen.”

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“As much as possible, airlines like Aer Lingus should remain independent competitors of British Airways [and] not be allowed to merge,” he added. “You’re taking away valuable competition on the Irish routes by allowing BA to take them over.”

The move reflects IAG’s ambitions to further its transatlantic operations and heightens the competition with Virgin Atlantic.

Aer Lingus’s former CEO, Christoph Mueller, stepped down earlier in 2015 to take the top job at Malaysia Airlines – which has been in the spotlight for a number of unfortunate reasons. During his time at Aer Lingus, Mueller had helped establish Dublin as an important focal point for the airline’s flights to North America.

This IAG deal will provide more slots at Heathrow and Branson said: “They’ve got far too many slots anyway”. He added that “if it was any other industry they would have been broken up by now”.

He encouraged the competition authorities to look “very closely” at the Aer Lingus deal. “It’s just giving BA more power, more slots.”

The Airports Commission is to publish its report on airport expansion in the South East this summer, which Branson will be awaiting with interest. 

He is in favour of building a third runway rather than expanding Gatwick and Branson said he would argue “very strongly” that BA has already got a complete dominance of slots at Heathrow, when they should be allocated to other companies.