Aer Lingus denied Ryanair injunction

Ireland's national airline today failed to block low-cost rival Ryanair's right to exercise its voting rights in Aer Lingus.

Ireland's national airline today failed to block low-cost rival Ryanair's right to exercise its voting rights in Aer Lingus.

EU judges in Luxembourg refused to grant Aer Lingus an injunction pending a full courtroom battle over Ryanair's 29.4 per cent shareholding in the bigger company.

The latest round in the fight for control came in the European Court of First Instance, which said there were no grounds to order Ryanair to refrain from exercising its voting rights.

The wrangle began when Ryanair acquired a 19.16 per cent stake in Aer Lingus when the company was privatised in 2006.

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Soon afterwards, Ryanair launched a public bid for the entire share capital - but the European Commission declared the proposed merger illegal under EU merger rules.

By then, Ryanair's share of Aer Lingus had risen to 29.4 per cent, and Aer Lingus asked the Commission to order Ryanair to sell its shareholding.

That request was rejected by the Commission last October, on the grounds that Brussels had no power under the merger rules to make such an order against a minority shareholder who did not have a controlling power in Aer Lingus.

Aer Lingus will challenge that decision in an appeal later this year, and today sought an interim injunction instructing Ryanair to refrain from using its voting rights in the meantime.

But the judges ruled that Aer Lingus had failed to show that such a blocking order was needed "as a matter of urgency" to prevent "serious and irreparable harm" to the company.

Ryanair's Head of Regulatory Affairs, Jim Callaghan, said: "We welcome the European Court's rejection of Aer Lingus' request for an injunction against Ryanair.

The European Commission had already decided on this issue and found that Ryanair has no control over Aer Lingus and it therefore cannot force Ryanair to sell its minority stake.

"This is just another waste of legal costs by Aer Lingus and an attempt to deflect from the fact that their fares and fuel surcharges continue to increase, whereas Ryanair had committed to reducing Aer Lingus' fares by 10 per cent and eliminating its unjustified fuel surcharges, saving consumers over €100 million (£75 million) per year."