Ryanair 'undervalued' Aer Lingus
Aer Lingus has said that Ryanair's bid for the airline undervalues the worth of the carrier and has advised shareholders to take no action in relation to the offer.
In a short statement issued this afternoon Aer Lingus also expressed doubt as to whether the bid would be allowed to be completed.
Aer Lingus noted how previous attempts by Ryanair to buy the remaining 70 per cent of the airline it does not already own have failed.
Ryanair has offered €1.30 per share for the 70 per cent of Aer Lingus it does not already own.
The offer is almost 50 per cent higher than the average price of Aer Lingus shares in the last six months, and well ahead of the €1 per share price that Minister for Transport Leo Varadkar previously indicated would be the minimum price acceptable to the Government.
Ryanair said yesterday it believed “circumstances have changed materially” since it made its first unsuccessful bid for Aer Lingus in late 2006. The low-fares carrier noted how many of Europe's flag carrier airlines have consolidated.
Shares in Aer Lingus surged today to €1.085 on the Dublin market at close, a rise of 15.43 per cent. Ryanair shares were up 0.75 per cent to €4.01.
In its statement Aer Lingus said it had delivered a "significantly improved operational and financial performance since 2009," which had transformed the carrier into "a robust, profitable airline"
Earlier today, Taoiseach Enda Kenny said the Government has competition concerns about a possible Ryanair takeover of rival Aer Lingus.
"The Government would be concerned obviously in terms of competition, in term of consumer facilities, in terms of price, access to the country," Mr Kenny said. "But it is a minority share that Government have, we don't have any veto over this, we don't have any blocking rights, and the details of the offer made by Ryanair have not yet been considered collectively by Government."
The Government won't be forced into a "fire sale" of its stake of Aer Lingus, Mr Kenny said. While Ryanair has improved its bid for Aer Lingus from a previous offer, the Government must consider the best interests of passengers, the Taoiseach added.
The Irish Hotels Federation (IHF) said the takeover would harm the tourist industry’s long-term interests. IHF president Michael Vaughan called on the Government to find a suitable buyer to ensure Aer Lingus’ Heathrow slots remained available to Ireland in the future.
“Even if Ryanair were to run the two companies separately, there would be serious monopoly concerns around air transit into Ireland,” says Mr Vaughan. “In terms of the Heathrow slots, these were acquired when Aer Lingus was under state ownership and they are of vital strategic importance to the country and our longterm tourism prospects.
“Ultimately, we what we need is more entrants into the Irish aviation space, not consolidation among the two major airlines.”
Impact trade union, which represents some 1,600 Aer Lingus staff, called for the bid to be referred to competition authorities.
Ryanair said yesterday the cash offer was prompted in part by the Government's plan to sell its 25 per cent holding in Aer Lingus as part of wider disposal of assets aimed at balancing budgets.
Fianna Fáil’s transport spokesman Timmy Dooley called on the Government to use its shareholding in Aer Lingus to prevent Ryanair from taking control of the airline.
“The existence of Ryanair and Aer Lingus as separate, competing entities has transformed our tourism and business connectivity. Any material change to the separate status of these airlines would inevitably lead to reduced competition, increased fares and less choice,” he said.
Sinn Féin restated its opposition to the sell-off of the State’s 25 per cent share in Aer Lingus and has called on the Minister for Transport to reject the Ryanair offer.
The party's Public Expenditure and Reform Spokeswoman Mary Lou McDonald said Aer Lingus was of strategic importance to the State.