Ryanair still has the hump with CMA

Ryanair rarely backs down in a fight, but its indication that it will sell its 29.8 per cent Aer Lingus stake to IAG allows it to dodge a showdown with the Competition and Markets Authority (CMA) in Britain... if it chooses.

The CMA had ordered it to reduce its stake to 5 per cent, something Ryanair has said is “ridiculous”. The authority’s rationale included that it was not good for competition for one airline to be able to influence whether a takeover offer for its rival succeeded or failed.

Ryanair had pledged to fight the CMA’s ruling to a Competition Appeals Tribunal. Then yesterday it decided to vote in favour of IAG’s €1.4 billion takeover of Aer Lingus.

Shares in the low-cost airline surged as investors bet that the €407 million or so that Ryanair will receive – effectively washing its face on the financial cost of acquiring the stake – will be returned to shareholders via some sort of special dividend.

Pretty soon, one would suspect, Ryanair’s Aer Lingus stake will zoom down past the requested threshold of 5 per cent set by CMA, all the way to zero. There’s no need for it to fight the CMA anymore. It can walk away with its head held high and tell investors it didn’t lose any of their money on the foray. Game over, right?

Wrong, it appears. Michael O’Leary was reported in the British press yesterday as saying that he will still fight the CMA’s ruling anyway, even if he has sold out to IAG.

"The ruling of the CMA was patently absurd; we intend to continue until we get it overturned," he reportedly told the Daily Telegraph. "We will, I'm sure, at some point in the future be involved in some M&A activity and we are not going to allow what is a clearly manifestly wrong ruling by the CMA to stand."

It seems like a pointless battle. But the new cuddly Ryanair clearly hasn’t shaken off the chippy persona that made it possibly Europe’s most successful airlines.