Aer Lingus to mount strong defence of Ryanair approach

Aer Lingus is planning a “very strong” defence strategy to the €748 million takeover approach from Ryanair and says there is “no need” for a merger.

The airline's chief executive Dermot Mannion told RTE's Morning Ireland Aer Lingus may not lose money next year following an agreement with employee unions on cost savings.

"The latest projections we put out for 2009 is that we will incur a loss, but that's before we take into account the outcome of the ballot in recent days and the €50 million ($64.3 million)" in cuts, he said. Under the plan around 200 staff are expected to leave the company.

"We will be recalibrating the budget in the next period of time and we will come out with a much better figure," Mr Mannion added.

"This will reposition Aer Lingus, yet again, as an airline that will be even better able to compete wth Ryanair." Before the agreement Aer Lingus said it would report an operating loss near the lower end of a €20 million to €30 million range this year.

Mr Mannion said the the competition position  - which led to the collapse of the first offer from Ryanair almost two-years ago - was now even more difficult.

"Where are the other airlines going to come from in the current climate to pick up slots at Dublin airport if these two airlines merge?"

He said Aer Lingus had an "independent strategy" and was competing with Ryanair on Irish routes. Mr Mannion challenged the growing belief that a series of consolidations in the airline industry would result in just three or four strong airline groups.

Mr Mannion believes there will be approximately ten strong airlines, including an independent Aer Lingus.

The Ryanair bid is a €1.40 per share cash offer that includes allowing the State to retain control of Aer Lingus's landing slots at Heathrow and offers recognition to unions in the former semi-State airline.

At 9.30am Aer Lingus shares were trading up 2 per cent at €1.58 while Ryanair stock was marginally lower at €3.25.