Shares in IAG and Aer Lingus are up 2.28 per cent and 1.37 per cent respectively in early morning trading.
An IAG statement posted to the stock exchange said:
The board of Aer Lingus has indicated to IAG that the financial terms of the proposal are at a level at which it would be willing to recommend to Aer Lingus shareholders, subject to being satisfied with the manner in which IAG proposes to address the interests of relevant parties. Accordingly the Board of Aer Lingus has granted IAG access to perform a limited period of confirmatory due diligence.
As the Irish government holds a 21.5 per cent stake in Aer Lingus, the prospect of a takeover has been subject to political scrutiny. IAG's offer is subject to the approval of government and Ryanair, which owns a 29.9 per cent stake.
Opposition politicians have called on Ireland's interim government to reject the bid as Aer Lingus' flights between the Shannon and Cork airports are considered vital to the economic prosperity of the region.
IAG has attempted to assuage any concern by alluding to the Irish government and local region in its plans for the airline:
It is IAG's intention that under its ownership, Aer Lingus would:
- Operate as a separate business with its own brand, management and operations, continuing to provide connectivity to Ireland, while benefitting from the scale of being part of the larger IAG group.
- Join the oneworld alliance, of which British Airways and Iberia are key members.
- Join the joint business that IAG operates over the North Atlantic with American Airlines, leveraging the natural traffic flows between Ireland and the US and the advantageous geographical position of Dublin for serving connecting flows.
IAG believes that the proposal would secure and strengthen Aer Lingus's brand and long term future within a successful and profitable European airline group, offering significant benefits to both Aer Lingus and its customers.
IAG recognises the importance of direct air services and air route connectivity for investment and tourism in Ireland and intends to engage with the Irish government in order to secure its support for the transaction.