Aer Lingus IPO Expected To Raise EUR660 Mln

September 11, 2006

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The initial public offering of Irish carrier Aer Lingus is expected to raise about EUR660 million giving the airline a market value of about EUR1.1 billion (USD$1.4 billion), sources familiar with the matter said on Monday.

As part of the IPO in London and Dublin, Aer Lingus will issue 200 million new shares while the Irish government will sell 75 million shares, the sources said.

The price range for the flotation is due to be announced on Tuesday morning but the sources said the mid-point was expected to be approximately 2.40 euros a share.

It will be the first flotation of an airline on the London Stock Exchange since easyJet six years ago and comes amid fears about airline security and high fuel prices.

Based on the mid-point offering price, Aer Lingus will raise about EUR500 million (USD$635.3 million) with the rest coming from the sale of part of the government's existing 85 percent stake.

The government will retain around 25 percent while the Employee Share Ownership Trust (ESOT) will keep its 15 percent stake.

Aer Lingus will use about EUR400 million (USD$508.3 million) of its proceeds to fund the group's EUR2 billion (USD$2.54 billion) fleet expansion plans and EUR104 million (USD$132.2 million) will go to help plug a gap in the carrier's pension fund, one of the sources said.

Aer Lingus, which has realigned itself as a low-cost carrier since a brush with bankruptcy in 2001, views the IPO as crucial to plans to expand its fleet, particularly the long-haul arm that is seen as key to its future.

Shares will be offered to domestic and international institutions. The public in Ireland and the UK will be allowed to buy, but a minimum subscription of EUR10,000 (USD$12,700) will apply.

The partial sell-off, long a hot political issue in Ireland, has been dogged by problems, including a row between management and unions over the pensions shortfall.

Unions at the airline remain opposed to the privatization, fearing it threatens the job security of members.

(Reuters)