Aer Lingus shareholders urged to reject bid

Aer Lingus chief executive Dermot Mannion has said he could conceive of no circumstances in which a takeover bid from Ryanair would be approved by the board.

At the publication of a defence document urging shareholders to reject Ryanair's €1.4 billion bid for the airline,

Mr Mannion said the company could grow shareholder value more with as an independent entity than as part of Ryanair.

He told shareholders: "Don't lose out on the opportunities that lie ahead for Aer Lingus. Don't sell your shares."

The document describes Ryanair's bid as ill-conceived, contradictory and anti-competitive and one that significantly undervalued the company.

Aer Lingus said its record showed it was able to cut costs and grow revenues.

Mr Mannion said since 2001 the airline has almost halved its unit costs and that he was making a commitment that the airline would receive a 15 per cent return on its fleet investment.

He said this would significantly add to shareholder value and that he was happy to be judged by that commitment.

He also added that he believed the ballot of Aer Lingus staff who hold shares through the ESOT "will overwhelmingly reject the [takeover] process." The result of this ballot is due in three weeks.

Presenting a series of data on aircraft utilisation, punctuality and customer satisfaction, Mr Mannion said the airline did not need Ryanair's management help to run Aer Lingus.

Chairman John Sharman said Aer Lingus offered a superior service which passengers preferred.

"Over the past five years, Aer Lingus has been substantially transformed. Faced with a strong, well-capitalised and independent Aer Lingus, Ryanair, our principal short-haul competitor, has reacted in a hostile, anti-competitive manner designed to eliminate a rival at a derisory price," Mr Sharman said.

In a direct attack on Ryanair's relations with staff, Mr Sharmon said Aer Lingus management had a unity of purpose with its workforce.

"Our product offering is differentiated from our peers. It is superior to Ryanair's, and passengers prefer to fly with Aer Lingus," he said.

"We have excellent growth opportunities and we have the fleet, staff, capital resources and management to deliver for shareholders."

However, when asked whether there would be more job cuts at the airline Mr Mannion said he was "not ruling anything in or anything out with regard to costs".

Aer Lingus floated on the London and Dublin stock exchanges in early October. Within days Mr O'Leary began buying up shares and went public with his takeover bid after securing over 19 per cent.

But he has faced serious opposition from a loose alliance of the Government, which holds over a quarter of shares; pilots' groups (2 per cent); and staff who have over 12 per cent.

Denis O'Brien also joined the battle to keep the airlines apart when he bought a 2.1 per cent stake.

Today, Mr Mannion said neither he nor his board have had any contact will Mr O'Brien or his agents and that the Aer Lingus board "is not acting in concert with any existing or future shareholders".

Dismissing the Ryanair offer, the Aer Lingus board said there is room for significant growth on short-haul and on long-haul services. It also claimed to have increased its short-haul business out of Dublin, home to both airlines, three times faster than Ryanair in 2005.

Advice from the Central Representative Council, which speaks for the main unions at Aer Lingus, has also been posted to shareholders today.