Varadkar rules out selling stake in Aer Lingus to Ryanair
Published 19/12/2012 | 05:00
THE Government has ruled out selling its 25.1pc stake in Aer Lingus to Ryanair.
The decision, announced by Transport Minister Leo Varadkar sinks any chance Ryanair might have had of securing outright control of its smaller rival.
Mr Varadkar said that he and fellow ministers "don't see any benefit to Ireland" in Ryanair's €694m offer to buy Aer Lingus. A sale of the government stake would have netted the Exchequer €174m.
Ryanair has been attempting to persuade competition watchdogs in Brussels that it should be allowed to buy all of Aer Lingus. It already owns nearly 30pc of the airline.
Ryanair – headed by Michael O'Leary – has proposed a number of so-called remedies to appease the European Commission's competition concerns.
Those include plans to sell the bulk of Aer Lingus' prized slots at Heathrow Airport to British Airways.
Mr Varadkar said yesterday that the Government remains committed to selling the taxpayers' holding in Aer Lingus, but accepting Ryanair's offer would involve "significant potential risks" to the economy here. He said it told the EU Commission of its concerns.
"The Government remains committed to a sale at the right time and under the right conditions."
Mr Varadkar said the Cabinet decision not to sell to Ryanair was based on advice it had received and also on criteria it set out when the airline launched its offer in summer.
The Ryanair offer has been scrutinised under four criteria:
lWhat's best for passengers in terms of air fares and connectivity;
lWhat's best for taxpayers in terms of the price that can be secured for the Aer Lingus stake;
lWhat's best for the economy and jobs;
lThe views of regulatory authorities.
Mr Varadkar added that proposals already sent by Ryanair to Brussels don't meet the Government's criteria on competition, connectivity and employment.
"Based on what is now in the public domain, the Ryanair remedies package does not satisfy our concerns about connectivity, competitiveness or employment for Ireland," he said.
"Obviously, the European Commission will make its own decision in its own time, but we do not see any benefit to Ireland in what has been reported."
Matt Staunton, national secretary of trade union Impact, which represents about 1,600 Aer Lingus cabin crew and pilots, said the Government's decision would be welcomed "with open arms" by members.
"There'll be great relief from pilots and cabin crew that the Government isn't going to sell to Ryanair," he told the Irish Independent last night.
Aer Lingus welcomed Mr Varadkar's statement, saying it remains committed to "connecting Ireland with the world".
The European Commission's competition watchdogs are due to announce their decision on whether they will allow Ryanair to proceed with its third Aer Lingus takeover attempt by February.
Ryanair insisted last night that the Government has no power to block the offer to buy Aer Lingus.
It said it can still be "successfully completed" if Ryanair acquires 50pc or more of Aer Lingus.
It claimed that its acquisition would "increase competition, choice, traffic and jobs to and from the island of Ireland".
But hitting the 50pc target would be difficult. Businessman Denis O'Brien owns almost 4pc of Aer Lingus and is opposed to Ryanair owning it.
An Aer Lingus pilots' consortium owns 5pc of the airline, and would also vote against it, as would other staff. Abu Dhabi-based Etihad, which owns nearly 3pc and has set its sights on buying more, would also likely oppose the Ryanair bid.
Ryanair needs control of 75pc or more of shares to delist Aer Lingus from the stock exchange without the consent of other shareholders. Not having the Government's stake under its control would prevent it from doing that.