Business Irish

Tuesday 12 November 2019

Aer Lingus sale: Government only obstacle to any merger - Ryanair

Ryanair asks UK competition and markets authority to reverse earlier decision on Aer Lingus

Michael O'Leary
Michael O'Leary
John Mulligan

John Mulligan

The Government is the only obstacle to Aer Lingus merging with another airline, including IAG, according to Ryanair.

Ryanair, which owns 29.8pc of Aer Lingus, has made the assertion in an application to the UK’s Competition and Markets Authority (CMA), as the airline tries to reverse a previous decision by the watchdog to force Ryanair to reduce its stake in Aer Lingus to 5pc at most.

British Airways and Iberia owner IAG, headed by Willie Walsh, has offered to buy Aer Lingus for almost €1.4bn. But the Government, which owns 25.1pc of Aer Lingus, has sought additional assurances and concessions from IAG before it agrees to sell its stake.

In a letter to the CMA, Ryanair stated: “The reaction of the Irish Government to these (IAG) announcements has confirmed what Ryanair always said (and the Competition Commission dismissed), namely that the Irish Government, and not Ryanair, represented the only obstacle to Aer Lingus’ combination with any other airline.”

The statement by Ryanair is significant because although chief executive Michael O’Leary has commented on the IAG indicative offer, he has declined to specifically say if Ryanair would be willing to sell its holding to Aer Lingus.

Financial analysts expect that Ryanair would be willing to sell, and the airline’s statement to the CMA is highly significant because Ryanair is confirming that it would not obstruct a sale of Aer Lingus.

In 2013, the CMA’s predecessor, the Competition Commission, ordered Ryanair to cut its Aer Lingus stake  also because it had concerns regarding competition in the UK.

The UK’s Court of Appeal recently upheld the CMA’s decision to force Ryanair to reduce its Aer Lingus stake. Ryanair will try to appeal that to the UK’s Supreme Court.

But Ryanair has told the CMA that its original decision is now flawed.

“The findings in the final report have now been contradicted and disproven by events, which demonstrate conclusively that Ryanair’s shareholding in Aer Lingus does not prevent Aer Lingus from merging with, being acquired by, or otherwise entering into combinations with other airlines, and which fatally undermine the lawfulness of the proposed divestment remedy,” it told the CMA.

The CMA is seeking responses from interested parties by March 17.

“IAG’s announcement, together with the reactions of Aer Lingus and the Irish Government, have comprehensively called into question the robustness and correctness of the conclusions reached by the Competition Commission, along with the “facts” on which they were said to be based, in ways that require a full reexamination of the determinations reached and remedy order in the Final Report. Ryanair is confident that any such re-examination will vindicate its position and cause the CMA to set aside the Competition Commission’s findings.

Ryanair chief executive Michael O’Leary and chief marketing officer Kenny Jacobs are currently in London unveiling the latest customer service developments at the airline.

Online Editors

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