Ryanair announces Aer Lingus takeover bid

Ryanair this morning announced a takeover bid for Aer Lingus. In a statement, the airline said it had already acquired 16 per cent of its main competitor in Ireland and made an all-cash offer of €2.80 per share for the rest of the company.

Ryanair said the offer was conditional on obtaining at least a majority of the shares in Aer Lingus. Shares in the airline in Dublin were up

over 15 per cent to €2.90 at close of business. Ryanair shares were down slightly to €8.63 at the same time.

The offer puts Aer Lingus's value at €1.481 billion and represents a premium of approximately 27 per cent over last week's IPO share price of €2.20 per share.

Speaking at the announcement of the offer this morning, Ryanair chief executive Michael O'Leary said it represented "a unique opportunity to form one strong airline group for Ireland and for European consumers.

Mr O'Leary, who previously said he had no interest in the long-haul market, said Ryanair and Aer Lingus would be run separately and Ryanair would stick to its successful low-cost carrier model.

"We will expand, enhance and upgrade the Aer Lingus operations. This offer - if successful - means both companies will continue to operate separately and compete vigorously in the small number of routes on which we both operate

"If accepted the Irish Government will realise over €500 million from the sale of their Aer Lingus shares, and the employees will realise over €220 million which equates to an average of over €60,000 per employee."

However, Minister for Finance Brian Cowen and Minister for Transport Martin Cullen stated that the Government remains fully and firmly committed to competition in aviation markets, adding it would not sell its shares in Aer Lingus.

Aer Lingus has refused to comment on the Ryanair offer.

Asked if the Competition Authority might object to such an offer, Mr O'Leary said "It's a European issue rather than a local competition issue, but there already has been well-established precedents across Europe where Air France has a similar percentage of the Paris market, in Germany where Lufthansa has a similar share and in Scandinavia where SAS has a similar share."

Mr Seán Ó Neachtain MEP, a member of the transport committee in the European Parliament, said "if Ryanair were to take over Aer Lingus, I believe that the European Commission would look very carefully indeed at such a takeover.

"Ireland is an island nation. We rely on Aer and Sea travel to get from one place to the next. Competition between Aer Lingus and Ryanair should be promoted because this is good news for the consumer. We want to promote competition in air travel and not diminish or restrict it," he concluded.

Socialist Party TD Joe Higgins said such a takeover would have "the most serious consequences for passenger welfare, workers' wages and conditions and trade union rights."

This evening Siptu's National Industrial Secretary Michael Halpenny called on the Government to buy back sufficient shares in Aer Lingus to prevent the takeover by Ryanair.

He said: "The Government is entirely responsible for this debacle and must act now, while the situation is still retrievable.

"If Ryanair succeeds in its bid not alone Aer Lingus workers, but the state's airports and the entire country will be in the gift of the most ruthless airline company in the world.

"It is essential that sufficient shares in Aer Lingus are bought back by the Government to block the takeover and the bid is referred to the Competition Authority as soon as possible."

A newly merged company would establish an Irish airline group with over 50 million passengers annually, capable of competing with the likes of Lufthansa/SAS/Swiss (75 million passengers), Air France/KLM (70 million passengers) and BA/Iberia (63 million passengers).

The Government held on to a 28.3 per cent stake in Aer Lingus when the airline was floated last Monday.

Trading on the grey market in Aer Lingus shares began the previous Wednesday when stock became available at €2.20 per share.