Tuesday 12 December 2017

Ryanair may have to sell half of its Aer Lingus stake

Michael O'Leary
Michael O'Leary

Peter Flanagan and John Mulligan

BRITISH regulators are set to force Ryanair to sell off half of its stake in Aer Lingus, effectively ending its chances of buying the former national carrier.

The UK Competition Commission is expected to decide this week if Ryanair's 29.8pc stake in Aer Lingus distorts the market for flights between Ireland and Britain.

Given the fact that almost all flights between the two countries are run by the two airlines, the commission's initial findings into Ryanair's holding is expected to demand that Mr O'Leary's firm reduce its holding by about half.

That would follow precedent in the UK. BSkyB built up a 17.9pc stake in the broadcaster ITV, but three years ago the commission ordered it to reduce that stake to 7.5pc.

If the commission does order Ryanair to sell part of its shares, it would as good as end any hope the company has of buying Aer Lingus.

Ryanair boss Michael O'Leary has tried three times to buy the carrier. All three bids have been blocked by regulators on competition grounds.

Britain's Office of Fair Trading, which referred the issue in the first place, has previously said it was likely the ownership structure may allow Ryanair to have "material influence over the commercial policy" of Aer Lingus.

Earlier this month, it emerged that an institutional shareholder in Aer Lingus had told the commission that Ryanair might be able to stop the former state-owned carrier from raising equity to fund new aircraft purchases if such a situation arose.

Last week, Mr O'Leary said that he expected the commission to come up with "some scatty idea" that the airline should sell part of its holding in its smaller rival.


"I can't imagine they'll require us to sell all of the stake, but there'll be some partial sell-down," he said.

"That will expose them to a lot of legal issues."

He added that Ryanair would appeal any order to sell any of its stake.

Aer Lingus is likely to welcome plans for Ryanair to sell off its stake. Company chief executive Christoph Mueller has repeatedly made clear he wants to see Ryanair "off the shareholder register".

The Government, which has retained a quarter of Aer Lingus, is also believed to be against Ryanair ownership. At the time of Ryanair's most recent bid for Aer Lingus, Transport Minister Leo Varadkar expressed reservations about a Ryanair takeover.

Irish Independent

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