Time to fasten those seatbelts
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MICHAEL O'LEARY is nothing if not dashing. In his new attempt to take over Aer Lingus, the Ryanair chief has seized the moment: the time of a world-wide slump in the aviation industry. It is also a time of mergers of what were once household names all over the continent, and Mr O'Leary does not conceal the extraordinary extent of his own ambitions.
Two years ago, the European Commission vetoed his earlier takeover attempt. But as he said yesterday, the world has changed. He claims that Aer Lingus is too small and too weak to survive independently. Now it is up to its board, which has rejected his offer, to prove him wrong -- if it can.
The offer, €1.40 per share, values the company at €750m. That is a sad comedown from previous valuations, but it shows that he is right when he says the world has changed.
He holds most of the cards. Ryanair and the Government between them own a majority of the Aer Lingus shares. If the Government supported Ryanair, and if the deal did not fall foul of Irish or EU competition law, it is difficult to see how it could be prevented from going through.
And Mr O'Leary holds out prospects of major progress: 1,000 extra jobs, dozens of new routes. To emphasise these points, however, is rather to understate the case than to overstate it.
For the Ryanair chief foresees a future which holds only four major European airlines: British Airways, Air France and Lufthansa -- and his own. Nobody can doubt that this is a plausible scenario. The industry is going through very troubled times, and will continue to face huge difficulties for years to come.
In a world in which Italy and Spain have lost their once-proud national airlines, it would be a remarkable thing to see Ireland among the Big Four, regardless of whether Ryanair retained the Aer Lingus name for its subsidiary and regardless of whether it allocated a special place in the market to the former national airline.
His main problem now may be to overcome the objections of the Aer Lingus trade unions, expressed in the wake of his takeover bid. But the strength of the unions, like that of the airline itself, has diminished. Yesterday -- perhaps not by coincidence -- their members were voting on an offer by management which involves a worsening of pay and conditions. Truly the world has changed.
