Aer Lingus expects bid ruling soon
AER LINGUS is expecting a preliminary decision from the European Commission on Ryanair’s proposed €1.30-a-share bid for the company in the next four to six weeks.
Aer Lingus chief executive Christoph Mueller said this was likely to result in the commission moving to a more detailed phase- two analysis of the offer.
“We hope by end of August, beginning of September, that they [the commission] will take a decision in one shape or form, most probably a phase-two decision,” he said.
Mr Mueller said he met the EU competition commissioner, Joaquín Almunia, two weeks ago to discuss the Ryanair bid. “We were able to extend the arguments and they were in a listening mode.”
Aer Lingus yesterday published its defence document, which urges shareholders to reject the offer.
Aer Lingus said its legal advice was that Ryanair’s offer would fail on competition grounds, as happened with a previous bid in 2007.
Five years ago, Aer Lingus and Ryanair overlapped on 35 routes from Irish airports. This has increased to 50 this year.
In 2007, Aer Lingus and Ryanair were the only operators on 22 of these routes. This has doubled to 44 this year.
Where their routes overlapped, Aer Lingus said their combined market share was 90 per cent from Dublin and 100 per cent from Limerick, Cork and Shannon.
Aer Lingus argues that its gross cash of €1.049 billion at the end of June equates to €1.96 a share, and that Ryanair’s bid also represents a 12 per cent discount on Aer Lingus’s net asset value.
The document was issued in parallel with the airline’s results for the six months to the end of June, which showed that revenue rose by 10.1 per cent to €626.3 million while its operating loss for the period narrowed to €4.4 million from €26.8 million in 2010.
However, its pre-tax loss increased by 79 per cent to €24.5 million due to exceptional items totalling €19.8 million.
These include €11.7 million for restructuring – mostly the relocation of Airbus A330 aircraft maintenance from Shannon to Dublin – and a provision of €4.3 million for legal costs associated with defending against Ryanair’s bid.
Mr Mueller described the performance as a “good result” in the current difficult economic climate.
He said its long-haul performance – passenger numbers rose by 11 per cent to 433,000 while its yield was up 9 per cent to €332.87 – was “stellar” due to more business-class travellers while demand on short-haul routes was mixed.
“It has changed a couple of times in the year,” he said. “Business demand from the export oriented sector is a success story in itself. More difficult to understand is the consumer. The Irish consumer was very reluctant at the beginning of the year booking, for example, Easter travel. That was below our expectations.
“We compensated for that with business travellers. That has changed now with some weakness in the UK market and the Irish consumer, due to the bad weather, now taking short-term bookings to the sun belt, Portugal, Spain and so on.”