Saturday 25 February 2017

Aer Lingus chief reacts sharply to O'Leary criticism

AVIATION

John Mulligan

John Mulligan

Aer Lingus chairman Colm Barrington has accused Ryanair's Michael O'Leary of causing financial damage to the former state-owned airline when he launched a "frivolous" second bid for the carrier in 2008.

In a stinging written rebuke to a letter Mr O'Leary sent Mr Barrington last week, the Aer Lingus chairman also accused the outspoken Ryanair chief of having made "grossly misleading" claims and dismissed his calls for the payment of a substantial dividend.

Mr O'Leary has been pushing for Aer Lingus to publish a recently completed internal report that investigated why the airline ended up paying almost €30m more than anticipated for a controversial 2008 leave-and-return scheme.

That saw over 700 Aer Lingus workers made redundant and then rehired on lesser terms.

The scheme wasn't accepted as valid by the Revenue Commissioners, and earlier this year Aer Lingus made a €29.5m settlement with the taxman. Aer Lingus has said it won't make the report publicly available and Mr Barrington reconfirmed that stance yesterday.

"It would be in contravention of our own board policies and our legal advice to release the findings of the review to any third party," he said.

In his letter to Mr O'Leary, Mr Barrington insisted that the financial hit wasn't as bad as the costs it incurred fighting Mr O'Leary's takeover battle.

"In my view, Ryanair's second frivolous and unsuccessful bid for Aer Lingus in 2008 and early 2009 had a much greater cost to Aer Lingus and its shareholders than the revenue settlement," Mr Barrington said.

He also reminded Mr O'Leary that excluding Ryanair's own acceptance of the offer (Ryanair now owns just under 30pc of Aer Lingus), only 0.1pc of other Aer Lingus shareholders accepted the Ryanair offer.

According to its financial reports, Aer Lingus spent almost €30m between 2006 and 2008 mounting defences to Ryanair's two takeover attempts. Mr Barrington also rejected Mr O'Leary's claims that Ryanair and other shareholders were "continually ignored" by the Aer Lingus board and management.

He also described as "grossly misleading" a description by Mr O'Leary of an Aer Lingus move last year to buy out its employee share ownership trust's interest in a profit sharing agreement as a "gift" to the ESOT.

Aer Lingus paid just over €25m last year to clear the ESOT's outstanding debts, thereby quashing the ESOT's rights to share in any future profits at the airline and also its ability to nominate directors to the Aer Lingus board.

The sharp exchanges between Ryanair and Aer Lingus come as the Government considers selling its 25.1pc holding in the latter. Mr Barrington said Aer Lingus would hope to have "constructive conversations" with Ryanair if it decided to dispose of its shareholding in the airline.

Ryanair said it would consider Mr Barrington's comments and respond in an open letter in due course.

Irish Independent

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