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Sunday 13 July 2014

Ryanair says it will appeal as latest bid to buy Aer Lingus fails

John Mulligan

Published 28/02/2013|04:00

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Ryanair CEO Michael O'Leary

RYANAIR said it will appeal the European Commission's (EC) decision to block the takeover of Aer Lingus, prompting fears of a protracted legal dispute that could distract the two airlines for years.

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Ryanair's bid to buy Aer Lingus was formally blocked for a second time by the EC yesterday.

The commission said consumers would pay higher fares, routes would be monopolised and "vibrant" competition would be damaged in the Irish market if the takeover went ahead.

It's the first time the EU has rejected the same planned takeover twice.

Ryanair – headed by Michael O'Leary – said it would appeal a decision it claims was "manifestly motivated by narrow political interests".

That appeal process is likely to run for years. But in the meantime, a UK competition probe could result in Ryanair being forced to sell some or all of its 29.8pc stake in Aer Lingus.

The appeal could also derail a plan by the Government to sell its 25.1pc stake in Aer Lingus, at least in the short-term.

The EU's competition commissioner, Joaquin Almunia, said that the decision to block the takeover "protects more than 11 million Irish and European passengers who travel each year to and from Dublin, Cork, Knock and Shannon."

He said a takeover would "most likely" have led to higher fares adding: "During the procedure, Ryanair had many opportunities to offer remedies and to improve them.

Inadequate

"However, those proposals were simply inadequate to solve the very serious competition problems which this acquisition would have created on no less than 46 routes."

Ryanair launched its third bid for Aer Lingus last summer. It valued the former flag carrier at €694m.

Aer Lingus chief executive Christoph Mueller welcomed the EU's decision.

"Aer Lingus's position from the outset has been that Ryanair's offer should never have been made," he said.

Ryanair had offered two significant remedies to the European Commission in an effort to allay competition fears.

Those proposed remedies included a plan to hand over 43 Aer Lingus short-haul routes – about half the total – to UK carrier Flybe.

Ryanair had intended to give Flybe €100m in cash and another €50m in ticket-sale revenue to consummate the deal.

Ryanair had also pledged to hand over take-off and landing slots at Gatwick and Heathrow airports to British Airways so it could operate additional services to Dublin, Shannon and Cork. Flybe and British Airways had committed to operate the services for three years.

But the commission said that Flybe "does not appear to have the proven relevant experience to maintain and develop Flybe Ireland as a viable and active competitive force".

It added that British Airways would have "little incentive" to stay on the routes beyond a three-year period.

Irish Independent

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