independent

Thursday 17 April 2014

New EU blow to Michael O'Leary's bid for Aer Lingus

THE EU is to lodge formal objections against Ryanair's third proposed takeover of Aer Lingus, after the airline failed to offer concessions that address all Brussels' competition concerns about the deal.

The European Commission is understood to have made it clear that it will reject what Michael O'Leary, Ryanair's chief executive, described as a "radical" remedies package to secure regulatory approval.

Media reports last night suggested that Ryanair had been told that the remedies package falls short of what is required to eliminate competition concerns on all routes where the merged Irish carrier would enjoy a dominant position.

A spokesperson for Ryanair said: "The EU is to come back this week with its concerns and comments on the package.

"There is a timetable for the statement of objections which ends this week or next."

Although Ryanair said last week it had found airlines willing to provide competition on routes that would otherwise be dominated by the merged Irish carrier, the commission concluded the offer was so unsatisfactory it had not asked rival airlines to comment on the details -- the usual step in assessing significant concessions.

The issuance of a so-called "statement of objections" by the commission will take Ryanair one step closer to its bid being blocked again, the ' Financial Times' reported.

In 2007, the commission prohibited Ryanair's first tilt at Aer Lingus on the grounds it would harm consumers by creating a near monopoly on some 35 routes to and from Ireland.

Ryanair can improve its offer to the commission at any time. After formal objections are issued, it will have an opportunity to challenge the findings and hold a hearing on the deal.

However, the commission is understood to be keeping an open mind and ensuring Ryanair has every chance to prove the bid for Aer Lingus can pass the competition test.

The provisional deadline for a commission decision is early February.

Feedback

Mr O'Leary said he had received "no feedback" from the commission but added he believed Brussels would find it "very difficult" to reject the proposed remedies package.

He told the 'Financial Times' that there were six airlines willing to provide competition on routes where Ryanair and Aer Lingus overlapped, although he did not identify them.

British Airways and Flybe are believed to be considering the case for operating services on routes where the Irish carriers overlap.

Willie Walsh, chief executive of IAG, British Airways' parent, confirmed the company had held discussions with Mr O'Leary, adding: "If there was some benefit to us in dialogue with Ryanair -- in the event they are successful (with the Aer Lingus bid) -- we certainly will do that."

Irish Independent

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