Aer Lingus IPO evokes positive response

Irish state airline Aer Lingus opened 11.8 percent above its 2.20 euro per share offer price -- at 2.46 euros a share -- as it made its full debut on the London and Irish stock markets, according to media reports.

The listing was to raise gross proceeds of 501.8 million euros (340.0 million pounds) for the company and it will use the net income towards a 2 billion euro fleet expansion plan and to make a one-off 104 million euro payment to help plug its pension deficit.

According to Reuters, conditional dealing in the commenced last Tuesday after the airline priced its initial public offering at the lower end of its 2.10-2.70 euro price range. On Friday, shares closed in conditional dealings at 2.48 euros. They reached as high as 2.49 euros last week.

Chief executive Dermot Mannion reportedly said, “The level of interest in Aer Lingus has been particularly positive, both in Ireland and overseas, and reflects the market’s confidence in the airline and its continued future as a profitable and competitive company.”

The initial public offering (IPO) was 3.8 times oversubscribed, according to Roy Barrett at Goodbody Stockbrokers, joint sponsor of the deal, reported sundayherald.com. He added 45 percent of total institutional demand came from Ireland, 20 percent came from the UK, 15 percent from the US and the other 20 percent from the rest of the world.

Meanwhile, Ireland’s finance minister said it was important for the government to keep a blocking minority stake in Aer Lingus to show its commitment to the airline. Brian Cowen said the move was to prevent a foreign takeover of the Irish state carrier.

“We wanted to show there was a continuing commitment of the government to the airline,” Cowen told the Financial Times. “It’s important for us to be able to influence the direction of the company going forward. (There is) the whole question of maintaining control of our slots at Heathrow. These are important issues,” he said.