Aer Lingus shares drop on bad day for markets

Aer Lingus's share price hit a new low yesterday with the stock declining by 2.3 per cent to close in Dublin at €2.10.

This is 16 cents below the price of Aer Lingus stock at the time of its flotation in September 2006 and 88 cents below its all-time high on January 12th this year when it was the subject of a bid from Ryanair. Aer Lingus is now valued at €1.1 billion, about €500 million below its peak in January.

Just 207,000 Aer Lingus shares changed hands in Dublin yesterday but the stock is so tightly held - Ryanair, the Government and staff own more than 70 per cent between them - that small volumes can move the price significantly.

Ryanair was also down on what was a bad day for markets. Its share price declined by 3.5 per cent in Dublin to €3.84. Ryanair's market value has fallen by €1.3 billion since the beginning of November.

Aer Lingus yesterday lodged its formal appeal to the European Commission's recent ruling that it did not have the power to force Ryanair to sell its shares in the former State-owned airline.

The papers were submitted to the Court of First Instance in Luxembourg. If successful, the appeal would enable the European Commission to order Ryanair to dispose of its 29.44 per cent stake in Aer Lingus.

Ryanair is the biggest shareholder in Aer Lingus and has spent about €400 million buying shares in the airline.

In the summer, the European Commission ruled against Ryanair's proposed takeover of Aer Lingus but said it did not have the power to force the airline to sell its shares.

"It is our intention to deal with the presence of Ryanair on our shareholder register decisively through short-term interim measures, as well as seeking a speedy permanent resolution from the Court of First Instance," Aer Lingus chairman John Sharman said.

Ryanair said it had "no doubt" the appeal would be dismissed. It said Aer Lingus's decision to reject Ryanair's requests for an egm to consider the axing of the Shannon-Heathrow route "highlighted" its lack of influence over its rival.