Ryanair may dump Lingus stake if Brussels blocks bid
Published 22/09/2012 | 05:00
Ryanair will "seriously" examine selling its near 30pc stake in Aer Lingus if the European Commission shoots down its €694m plan to buy its rival, according to chief executive Michael O'Leary.
Speaking yesterday following Ryanair's annual general meeting in Dublin, Mr O'Leary said that the airline has received approaches from "financial institutions" interested in buying its Aer Lingus stake.
He said the most recent approach had been made within the past three months and claimed potential buyers were interested in breaking up Aer Lingus.
Mr O'Leary declined to say whether the institutions that have approached Ryanair include private equity suitors.
Ryanair has delivered a draft of what Mr O'Leary described as "revolutionary remedies" to the European Commission in order to persuade it to approve the Aer Lingus takeover.
Key among those remedies is relinquishing up to 35 routes currently operated by Ryanair or Aer Lingus, to rivals such as British Airways and Virgin.
Mr O'Leary declined to confirm the airlines Ryanair has spoken to, but he said carriers have already indicated their interest in operating the services. He said the airlines would operate services from Dublin, Cork, Shannon and Knock.
"If the commission turns down this remedies package, then I think we would have to seriously consider exiting our investment in Aer Lingus, which will without question result in Aer Lingus being broken up," Mr O'Leary claimed.
He declined to say whether Ryanair might look to sell its Aer Lingus stake as early as next year if the EC blocks its latest takeover attempt.
He claimed a sale of Ryanair's stake would result in the value of the Government's 25.1pc holding in Aer Lingus being "devalued by about 50pc".
Mr O'Leary also refused to be drawn on what price level might be acceptable to Ryanair for its Aer Lingus stake.
"The price wouldn't be that important to us in a disposal," he said. "We've already written off most of the value of the investment. If we have to dispose of it, I'm very confident we'll dispose of it for more than it's currently written down to in our books," he added.
Ryanair spent about €407m accumulating its Aer Lingus stake. Ryanair valued the holding at just under €150m at the end of March.
"We've had approaches from financial investors who want to take our stake and break it [Aer Lingus] up," said Mr O'Leary.
"There's lots of people who want to take Aer Lingus' Heathrow slots. Nobody wants the big chunk of the airline that loses money competing with Ryanair on short-haul flights to the UK and Europe," he claimed.
"The sum of Aer Lingus' bits is worth more than Aer Lingus' share price, and that's even with it having risen on the back of Ryanair's offer."
Ryanair's third offer to buy Aer Lingus has lapsed due to the European Commission launching an in-depth probe into the offer. Ryanair has said it will launch a fresh offer if the European Commission gives the go-ahead to a deal. The commission is expected to make a decision by January.