Aer Lingus presses Irish government on IAG takeover

By Conor Humphries

DUBLIN (Reuters) - The chief executive of Aer Lingus (AERL.I) warned that the Irish airline's growth prospects could be jeopardised if a takeover bid by the owner of British Airways is rejected.

Aer Lingus' board last month recommended a 1.36 billion euros (970 million pounds) offer from IAG (International Consolidated Airlines Group), (ICAG.L) subject to the Irish state selling its 25 percent stake. However, political and trade union opposition to the deal has been significant.

Operating profit rose 18 percent to 72 million euros before exceptional items in 2014, helped by a 24 percent increase in long-haul traffic to North America, the airline said on Tuesday. Opponents of the deal have cited profitability to back their case to maintain it as an independent airline,

However, outgoing chief executive Christoph Mueller said the airline could not afford to give up the potential boost an IAG tie-up might bring.

"We are a growing company... but every step further becomes more risky because we are the smallest competitor on the North Atlantic," Mueller told journalists in a conference call.

"Complacency has never been a currency I am trading in... we cannot leave out chances of growth."

Aer Lingus shares were little changed at 2.245 euros by 1045 GMT, below the IAG offer price of 2.55 euros because of continued uncertainty about the deal.

Aer Lingus management has joined IAG in trying to convince sceptical Irish politicians of the value of the deal, with both appearing before parliament in the last two weeks.

But several members of the centre-left junior partner in Ireland's government, the Labour Party, have been vocal in their opposition.

The Irish Independent newspaper on Tuesday reported that members were preparing a motion for their national party conference later this week to block the stake sale.

A spokesman for the party said no motion had yet been received by the party's leadership and that a motion would not be binding on either deputies or government ministers.

A key concern of the Labour deputies, several of whom are seeking re-election next year in constituencies close to Aer Lingus' Dublin airport headquarters, is possible staff cutbacks.

Aer Lingus said in its result statements that it was increasing planned cost savings to 40 million euros from 30 million and chief executive designate Stephen Kavanagh said the IAG bid would ultimately mean fewer layoffs at Aer Lingus.

An IAG takeover would have "a significant positive net impact on employment both directly and indirectly," said Kavanagh, who takes over as chief executive on March 1. "The compare and contrast is quite stark."

(Reporting by Conor Humphries; editing by Jason Neely and Keith Weir)