Commission puts back decision on Ryanair bid

The European Commission has postponed by 14 days its decision on whether to approve Ryanair's proposed €1.4 billion purchase of Aer Lingus.

A spokeswoman for the commission said yesterday that it had put back the deadline to give it time to consider the proposed remedies to competition concerns as put forward on Wednesday evening by Ryanair. She declined to give details, but any concessions by Ryanair are expected to relate to European routes where both carriers currently operate flights.

Analysts said they weren't surprised by the extension, and sources familiar with the situation said it is quite normal for such an extension to be granted. The commission now has until December 20th, rather than the 6th, to decide whether to approve the transaction with the concessions offered by Ryanair, to approve it with more concessions, to refer it to another antitrust authority or to open a four-month extended review.

In the end, however, the commission's decision may well be irrelevant as the takeover bid is widely expected to fail due to a lack of support from shareholders, in particular the Government and the airline's staff and pilots. Shareholders controlling almost 40 per cent of Aer Lingus have rejected the offer.

The market doesn't appear to be the only one believing the bid will fail. Ryanair finance director Howard Millar yesterday likened the chance of the bid succeeding to England winning the Six Nations rugby tournament.

"We believe, at this stage, it is a long shot," Mr Millar said at an air transport conference in London yesterday.

Ryanair, which on Tuesday increased its holding in Aer Lingus to 25.2 per cent - matching the stake held by the Government - has set a deadline of next Monday for shareholders to accept its offer of €2.80 a share.

Shares in Aer Lingus fell yesterday, ending the day down one cent at €2.73 in what was a soft market in Dublin. Ryanair meanwhile was hit harder, dropping 30 cent, or 3.1 per cent, to €9.40, a move that was most likely linked to gains in the price of oil. Volumes were muted.

Ryanair and Aer Lingus currently compete on routes to 33 cities in Europe and on services from Shannon and Cork to London.

Aer Lingus will today outline cost savings it expects to make next year. The company has been obliged by the Takeover Panel to detail staff cost savings referred to in its defence document advising shareholders to reject the hostile Ryanair bid. - (Additional reporting, Reuters)