Ryanair to be told of scale of Charleroi payments

Ryanair will today find out the scale of the repayments it will have to make regarding subsidies it received for using Charleroi Airport in Belgium.A last-minute appeal by the airline for a one-month delay in making the decision fell on deaf ears last night at the Commission.

Commission sources say the airline is likely to have to repay around a quarter of the subsidies it received. The Commission estimates this amount to be a maximum of €7 million, adding €3 or €4 to the price of a ticket, an EU source told reporters yesterday in Dublin.

It also stressed that Ryanair would keep some 75 per cent of the subsidies it got.

The airline has promised to pursue complaints against rival airlines and publicly-owned airports if it is singled out in the decision. Aer Lingus and Aer Rianta, both of which have been cited by Ryanair as examples of companies that might have questions to answer on the issue of subsidies, last night played down the threat.

Both said they would await the ruling before commenting on the prospect of any impact on their operations. A spokeswoman for Aer Lingus pointed out that the Aer Rianta discount scheme under which it recently launched 11 new routes had been available to everyone.

Sources close to State airports operator Aer Rianta acknowledged that it might have to amend its inducements if EU Transport Commissioner Ms Loyola de Palacio, as expected, limits assistance to new routes for a period of three years.

However, it might also adversely affect the prospects for Shannon and Cork airports as standalone operations following any break-up of Aer Rianta.

Airports Council International, an association representing airport operators, yesterday called on the Commission to give clear guidance on what incentives to airlines are permissible.

The association's director general, Mr Philippe Hamon, said that airports needed a clear framework to ensure deals would not fall foul of EU rules. "The legal uncertainty surrounding the incentives that regional airports may offer airlines must be clarified so that airports and the communities that they serve may continue to benefit from low-fares airlines," he said.

Market commentators said today's ruling was likely to put Ryanair shares under further pressure. "The company will spin and the Commission will play down the impact but the analysts will read it as a threat to the airport charges element on the profit and loss account," said one analyst.

"Coming a week after the hit on the income side with the profit warning, this is effectively adding to the costs side of the equation."

However, they said that Ryanair would not be unduly troubled by a falling share price in the short term as it is not trying to raise capital. And they speculated that Ryanair might use the judgment to switch strategy, redeploying its operations from secondary airports in secondary locations to more mainstream locations.

That would bring it into direct confrontation with rival low-fare operators and some flag carriers, triggering a price war.

Ryanair shares closed down 4.3 per cent in Dublin yesterday at €4.66.