Saturday 18 November 2017

Government assessing Ryanair's fresh bid for control of Aer Lingus

John Mulligan

John Mulligan

The Government is considering Ryanair's €694m offer for Aer Lingus, but plans to assess the bid under criteria where it appears likely to eventually oppose the fresh takeover move.

At a scheduled Cabinet meeting yesterday, ministers and the Taoiseach discussed the Ryanair offer that was made last week. Ryanair will make a formal offer for Aer Lingus next month -- its third in less than six years.

However, a government spokesman said that the bid will be need to be considered under three criteria:

• What's best for passengers in terms of connectivity and air fares.

• What's best for taxpayers in terms of the price for the government stake.

• Whether competition authorities will even allow Ryanair to complete a takeover of Aer Lingus.

But Transport Minister Leo Varadkar has already said that he believes the €1.30 a share indicative offer from Ryanair undervalues Aer Lingus. It values the Government's 25.1pc stake in the former state-owned airline at about €175m.

The offer is less than half the price Ryanair, which already owns 29.8pc of Aer Lingus, was willing to pay for its rival when it launched its first bid to gain control of Aer Lingus, back in 2006.

Taoiseach Enda Kenny said last week that the Government wouldn't engage in a fire-sale of state assets.

The Government will undoubtedly have concerns about a combined Ryanair-Aer Lingus entity, which would control about 80pc of flights out of Dublin.

While Ryanair might pledge to reduce Aer Lingus's fares and remove a fuel surcharge its rival charges, these probably won't be enough to sway the Government.

Ryanair boss Michael O'Leary and his advisors have already met officials from the European Union's Competition Commission in an attempt to determine what remedies the airline could offer that might be enough to persuade the commission to rubberstamp an Aer Lingus takeover.

However, it will be difficult for Ryanair to overcome objections made by the commission to Ryanair's first bid. The commission examined the proposed takeover on a route-by-route basis and determined that a Ryanair takeover would create serious competition concerns.

The UK's Competition Commission is also investigating whether Ryanair has had undue influence over Aer Lingus and if its holding in its rival has resulted in decreased competition.

Irish Independent

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