Ryanair seeks support for Aer Lingus bid

RYANAIR HAS made new overtures to the Government and the trade union movement as it campaigns to win shareholder support for its €748 million bid for Aer Lingus. Aer Lingus has said that the new approach "significantly undervalues" its business.

Ryanair promised to give the Government outright control over Aer Lingus slots at Heathrow airport, promised to recognise trade unions in Aer Lingus and to restore one morning and one evening flight linking Shannon and Heathrow.

Ryanair also promised to provide a €100 million bank guarantee that it would cut short-haul fares in Aer Lingus by 5 per cent in each of the three years after any takeover and promised a further €100 million guarantee to eliminate fuel surcharges within a month of any deal.

There was no comment from the Government, which has a 25 per cent stake in Aer Lingus. The promises received a cold response from Aer Lingus chief Dermot Mannion and the airline's unions.

"What Ryanair had to say today was academic," Mr Mannion said.

The EU prohibition on a Ryanair takeover of Aer Lingus remained firmly in place, he said. "The position is that nothing has changed over the last two years."

Niall Shanahan of the trade union Impact, which represents Aer Lingus cabin crew and pilots, said Ryanair was "only guaranteeing what staff at Aer Lingus already have".

The promise to recognise unions would meet with circumspection, he added.

Ryanair chief Michael O'Leary said he briefed Minister for Transport Noel Dempsey on the enhanced bid terms on Wednesday night, stating that Ryanair held over these details from its offer notice on Monday morning as it did not want them to become lost in the publicity surrounding the announcement of the all-cash offer. Ryanair notified the Takeover Panel of the meeting afterwards, he said.

While Ryanair's investors had not expressed any disquiet about the latest bid, Mr O'Leary said he did not think they understood that the goal of building a "world leader" by combining Ryanair with Aer Lingus was a prize worth spending time on.

"Most of our European and US investors think this is a small regional airline, 'why are you wasting your time with this?' . . .

"I think their general view is 'fine, go ahead but we don't want any distraction from Ryanair's day-to-day management'."

Ryanair has offered €1.40 a share for Aer Lingus, half the level of its 2006 bid. Such a price represents a 28 per cent premium on the closing price of Aer Lingus shares last Friday, before Ryanair tabled its new offer on Monday.

Mr O'Leary said the enhanced bid terms would mollify the concerns of each of Aer Lingus's stakeholders.

He said Ryanair would welcome any other approach for Aer Lingus, but said British Airways, Air France or Lufthansa would target the Heathrow slots if they were to bid for the airline.

Ryanair shares, down 34.2 per cent in the past 12 months, closed 1.38 per cent stronger last night at €2.94. Aer Lingus shares, down 33.5 per cent in 12 months, closed 5.47 per cent stronger at €1.35.