Thursday 21 September 2017

Ryanair faces Aer Lingus ruling in UK today

John Mulligan

John Mulligan

Ryanair is expected to be told this morning that it must comply with an order to sell most of its 29.8pc stake in Aer Lingus.

The UK's Court of Appeal is due to deliver its ruling at 10.30am.

The court heard the case back in November, and initially indicated that it intended to deliver its ruling by Christmas.

Ryanair is appealing an order from the UK's Competition and Markets Authority (CMA) that told the airline to cut its Aer Lingus stake.

The CMA cited competition fears for making the order in 2013. It said Ryanair should be able to own no more than 5pc of Aer Lingus.

Ryanair has indicated that if today's ruling goes against it, that it will appeal to the UK's Supreme Court. But it can only do so on a point of law.

The CMA has previously indicated that it would appoint a trustee to handle the sale of Ryanair's holding.

But selling off the stake in chunks - and the very fact that Ryanair would be a forced seller - would serve to drive down the Aer Lingus share price.

Ryanair would almost certainly prefer to be able to sell the entire holding to British Airways owner IAG, which has tabled a proposed €1.36bn offer to buy Aer Lingus.

Ryanair hasn't yet said if it would back an IAG bid for Aer Lingus. Ryanair boss Michael O'Leary has insisted there's been no contact between the airline and IAG.

The CMA has laid down a number of criteria related to the potential sale of Ryanair's Aer Lingus stake, including that any sale to a buyer wouldn't result in further competition concerns, and that Ryanair wouldn't be connected to the buyer.

The CMA had claimed that the fact Ryanair held a stake in Aer Lingus had prevented possible buyers from approaching the smaller airline.

Ryanair has insisted that the CMA - its predecessor is the Competition Commission - had no jurisdictional right to probe its Aer Lingus stake.

Michael O'Leary has said that he and his board would consider an offer from IAG for Aer Lingus if a formal bid is made.

The airline spent a total of €407m buying its Aer Lingus stake. IAG has tabled an indicative €2.55 per share offer for Aer Lingus, which would yield €406m for Ryanair. It has already written off most of the Aer Lingus investment on its books.

A sale of its Aer Lingus stake would be a useful way to bolster its cash balance.

Irish Independent

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