Monday 23 October 2017

Ryanair should move on from Aer Lingus

Ryanair's latest bid for Aer Lingus, the third in less than six years, comes less than a month after the airline failed to block the UK Office of Fair Trading from referring Ryanair's existing 29.8 per cent shareholding in Aer Lingus to the Competition Commission, and highlights once again what a disastrous investment Aer Lingus has been for Ryanair.

Even at this early stage, it is clear that Ryanair's chances of taking over its main Irish rival are pretty close to zero. So why does Michael O'Leary bother? By launching yet another bid he may be hoping to buy time. An adverse ruling from the UK Competition Commission could force Ryanair to sell its Aer Lingus stake.

By bidding again he puts the issue back into the European Commission's court. While the Commission has already barred Ryanair from taking control of Aer Lingus, it has not forced it to sell the stake it already owns.

It's high time Ryanair stopped messing around. It has spent €470m building its Aer Lingus stake. Even if another buyer was prepared to match the €1.30 a share Ryanair is offering, that shareholding is now worth just €207m and a mere €169m at the current market price. However, Ryanair wrote down the value of its Aer Lingus shareholding by a total of €323m in its 2008 and 2009 accounts.

Instead of wasting even more time on Aer Lingus Michael O'Leary should admit he was wrong, sell the shares and move on.

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