Air France: Ryanair's 30pc Aer Lingus stake is 'not a deterrent'
UK Competition Commission hears national carrier is attractive, but not right fit
Published 20/04/2013 | 05:00
AIR France says Ryanair's nearly 30pc stake in Aer Lingus is not a deterrent to other airlines taking a stake in the former state-owned carrier.
In evidence to the UK's Competition Commission as it decides the fate of Ryanair's stake in Aer Lingus, both Air France and Lufthansa said the Irish airline remains an attractive takeover target, but not necessarily for them.
The comments come as Ryanair chief executive Michael O'Leary said there is "not a chance" of his airline teaming up with the Government to put their combined stakes in Aer Lingus for sale. The Government owns 25.1pc of Aer Lingus.
Aer Lingus has told the UK competition watchdog that Ryanair's "noisy and belligerent conduct serves as a deterrent to third parties who might otherwise engage with Aer Lingus".
The Competition Commission is probing Ryanair's stake in Aer Lingus to determine if the airline, headed by Michael O'Leary, exerts undue influence over its smaller rival. Aer Lingus has insisted Ryanair does, while Ryanair says it doesn't.
The UK's Office of Fair Trading (OFT) has previously said that Ryanair's stake in Aer Lingus "may give it the ability to exercise material influence over the commercial policy" of the former flag carrier.
If the Competition Commission finds this is the case, it could order Ryanair to sell all or part of its stake in Aer Lingus. But such a ruling would be appealed by Ryanair and the matter could drag on for some time.
"Since its first failed takeover bid, Ryanair has engaged in a campaign of distraction and disruption to weaken its competitor," Aer Lingus has told the Competition Commission.
"While nominally acting as a shareholder, in reality Ryanair has deployed shareholder rights in pursuit of its interests as a competitor, with the purpose and effect to constrain Aer Lingus' flexibility and reduce its ability to compete."
Ryanair has countered that its shareholder activism is justified by the size of its stake in Aer Lingus.
"Shareholder activism is a vital part of modern democratic corporate governance and is actively encouraged by stock exchange regulation. Ryanair has acted as any large minority shareholder would do in these circumstances and has been proven to be right on many occasions," it has told the OFT and the Competition Commission.
Air France-KLM owns the Dublin-based Cityjet airline that it's currently seeking to sell. Air France told the Competition Commission that it believes the airlines likely to be most interested in buying a stake in Aer Lingus would be British Airways owner IAG, Virgin or any US or Middle East airline. Etihad owns almost 3pc of Aer Lingus.
But IAG chief executive Willie Walsh has already ruled out buying Aer Lingus, while the chief executive of US-based JetBlue, Dave Barger, also ruled out such a move last week.
Michael O'Leary also said yesterday that Ryanair could launch transatlantic flights in four or five years if it could get aircraft to operate such routes at a good enough price.