Aer Lingus - A done deal?
Let's assume the sale of Aer Lingus goes ahead and let's leave aside all the rights and wrongs of the sale to ask just who will get the shares when they are distributed.
Only 60 per cent of the company will be on offer, and it's estimated it will be sold for about €600 million. Pension funds, banks and insurance company funds would snap those shares up, depending on the price, if given the chance. And that's just the domestically-owned financial institutions. International investors may also be interested. The National Pension Reserve Fund may buy some, instead of spending most of its money overseas. But what about the "ordinary" citizen? Will he get the chance to buy his own company from himself?
There are super wealthy individuals who could buy hundreds of thousands of euro worth – or even millions worth – of shares in Aer Lingus, as either long-term investments, or for a quick sale in the weeks after flotation for what would likely be an easy profit. And then there are others who may have SSIA windfalls burning holes in their pockets, who might purchse a few thousand worth of Aer Lingus shares.
However, making shares available to those who can afford to buy what is at present "their" company is in itself inequitable because it excludes the existing owners who can't afford to buy.
Then there is the price. Everyone forgets that Eircom shares were priced relatively cheaply to entice "ordinary" people. Those who sold within a short period after the stock-market debut made tidy profits. The greedy lost because they hoped to make even bigger profits and were caught when the share price collapsed instead.
But that isn't how people remember it. So many lost that they believe the Government ripped them off with the initial share price. So if the Government wants to avoid criticism of causing people to lose money on stock-market gambling – and in the run-up to an election it won't want to face that charge – the temptation will be to sell Aer Lingus shares cheaply. But the problem with that is that the Government cannot be seen to sell the airline too cheaply or it may give validity to the claim that it is selling the family silver.
That is all to come, assuming the sale goes ahead. However, the formal Government announcement that it is to proceed is not a guarantee that it will happen. The company's aspiration for a June stock-market debut looks most unlikely. Much can happen before the next likely date of September to give the Government an excuse to pull the sale.
That the sale has been announced – despite the strong opposition and strike threats from SIPTU – suggests some sort of deal between Bertie Ahern and David Begg of ICTU, of which the sale of Aer Lingus is just a small concession. It must be some deal.
The Last Word with Matt Cooper is broadcast on Today FM, Monday to Friday, 4.30pm to 7pm