Irish government agrees to sell its 25 percent Aer Lingus stake to British Airways parent AIG

CAPTION CORRECTION, CORRECTS FROM AIG TO IAG IN SECOND SENTENCE - FILE - In this Tuesday, Jan. 27, 2015 file photo, Aer Lingus planes at Dublin airport, Ireland. The Irish government said Tuesday, May 26, 2015 that it intends to sell its 25 percent stake in Aer Lingus to IAG after receiving guarantees that the parent company of British Airways will increase employment and air links with the United States. (AP Photo/Peter Morrison, File) (The Associated Press)

DUBLIN – The Irish government says it intends to sell its 25 percent stake in Aer Lingus to AIG after receiving guarantees that the parent company of British Airways will increase employment and air links with the United States.

AIG, which also operates Spain's Iberia airline, confirmed revised terms of its takeover offer as Ireland's Cabinet announced its decision Tuesday night.

To succeed, AIG still must persuade the Irish airline's largest shareholder — rival carrier Ryanair — to accept the offer valuing Aer Lingus at 1.4 billion euros ($1.52 billion). Ryanair holds 30 percent of Aer Lingus shares because of its own three thwarted takeover bids, but has yet to talk directly with AIG.

Ireland's business and tourism chiefs welcomed the decision. But labor unions expressed reservations.