independent

Sunday 20 April 2014

Flybe offered €100m to help Ryanair's Aer Lingus bid

Ryanair CEO Michael O'Leary

RYANAIR is thought to have offered a gift of €100m to struggling UK airline Flybe if it agrees to take over around 43 Aer Lingus short-haul routes.

Ryanair desperately needs to share out Aer Lingus routes with other airlines if it is to convince the authorities in Europe to okay its third bid to buy Aer Lingus. The two Irish airlines currently control around 80pc of the flights between Ireland and the UK.

To win approval for the takeover, Ryanair has to prove that passengers will have a choice of airlines with a secure future when flying between Ireland and the UK.

Ryanair's Michael O'Leary is racing against time as he tries to cobble together a deal with other airlines to persuade the European Commission to allow Ryanair to take over Aer Lingus. The commission will rule on the takeover next month.

It's believed Ryanair has also offered to lease 10 Aer Lingus aircraft, complete with crew, to Flybe as part of the deal.

Ryanair would forego about €20m of Aer Lingus's pre-tax profits as a result of the deal.

Flybe has previously confirmed it's been in talks with Ryanair regarding the Irish airline's efforts to buy out its smaller rival in a takeover that would value Aer Lingus at €694m.

Ryanair already owns close to 30pc of Aer Lingus and the current effort to secure the green light from the European Commission's competition watchdog is seen as a final attempt to buy the remainder.

Mr O'Leary has already said he will consider selling his airline's Aer Lingus stake if Ryanair fails this time to persuade the EC that it should be allowed to acquire the former state-owned carrier. Mr O'Leary has warned that Aer Lingus will be split up if Ryanair was to sell its stake in it.

It's also understood that Ryanair retracted an offer it made to British Airways that would have seen it sell a chunk of valuable landing slots at Heathrow. The two airlines had signed a non-binding agreement in relation to a proposed deal. But there was a political and public backlash in Ireland at the notion.

Control

The Government subsequently said it would not sell its 25.1pc stake in Aer Lingus to Ryanair.

But under a fresh proposal, British Airways will instead operate flights from London Gatwick to Dublin, Shannon and Cork, and hold an option over the Heathrow slots if Ryanair manages to gain more than 75pc control of Aer Lingus. The Government is able to block any slot transfer as long as it retains its 25.1pc stake in Aer Lingus.

The EU intends to make its decision by March 6. The EU Competition Commissioner Jaoquin Almunia said last Friday that Ryanair had "one more time" to gain approval.

Irish Independent

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