Third bid for Aer Lingus fails to fly with commission
It will not be a case of third time lucky for Michael O’Leary, following what appears to be the European Commission’s decision to reject Ryanair’s third takeover bid for Aer Lingus.
Ryanair’s decision to publicise the findings ahead of the official announcement raised some eyebrows. The airline is, after all, permitted to submit further concessions before March 6th.
However, Ryanair’s pre-emptive strike is not unusual in this regard. UPS similarly alerted the market to the commission’s decision on its rejected takeover bid for TNT last month ahead of the official announcement.
Ryanair said yesterday it would appeal, pointing out that it had met “every competition concern raised in the EU’s Statement of Objections and during the review process”.
The airline certainly put forward a remedies package that far outweighed anything proposed in previous bids.
Details of a complex remedy package involving the offloading of routes and cash payments to two other airlines, FlyBE and British Airways, started emerging from Brussels last week.
Whatever the official response of the European Commission, which has declined to comment, those proposed remedies certainly were not enough to satisfy the Government’s concerns about “connectivity, competition or employment”, according to an official statement by Minister for Transport Leo Varadkar yesterday.
But perhaps the irony is that the rejection of the €694 million bid throws up more questions about Aer Lingus than Ryanair. Attention will now focus on Ryanair’s intentions regarding its 30 per cent shareholding in the airline.
Selling its stake
O’Leary said last September the airline would consider selling its stake if its third takeover bid was rejected. The Government is also obliged to sell its 25 per cent stake in Aer Lingus under commitments to the troika.
From a European perspective, the decision has also focused a spotlight on Joaquín Almunia, the EU’s competition commissioner. While the commission clears the overwhelming majority of mergers, Almunia has been responsible for blocking three major deals since taking office in 2010 – the merger of NYSE Euronext and Deutsche Börse, of Greek airlines Aegen and Olympic Air, and the UPS –TNT deal last month.
O’Leary will undoubtedly feel aggrieved at the failure of his bid to get over the line, particularly in light of transactions that have been sanctioned in the aviation industry in recent years. Sources in Brussels have said the deal was being looked at very seriously by the commission.
The airline may also feel that public and Government sentiment towards the deal was muddying what was in fact a matter for competition law.
In this regard Ryanair only has itself to blame. Ryanair’s unique public relations strategy based on a dubious customer relations policy meant the dominance of “Europe’s favourite airline” was never going to garner public support despite the enormous benefits the airline has brought to consumers in terms of access and price.
For Ryanair that, in itself, is a disappointing irony.