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Ryanair will accept AIG offer for Aer Lingus

Ryanair have cleared the way for British Airways owner International Airlines Group (IAG) to take over Aer Lingus as it accepted an offer for its 29.8pc stake in the Irish carrier.

The low-cost operator today said its board had voted to accept the deal, saying the IAG offer "maximises Ryanair shareholder value".

Ryanair became kingmaker in the deal after IAG's €1.4bn offer was accepted by the Aer Lingus board and approved by the Government - owner of a quarter of the company - in May.

But the offer was conditional on acceptance by at least 90pc of shareholders, and there had been speculation that Ryanair might choose to play hardball and force IAG to return to the table with a higher bid. IAG said it would not raise the terms.

The background to the transaction is complicated by a long-running battle fought by Ryanair against UK competition authorities, which have ordered it to cut its stake in Aer Lingus.

"We believe the IAG offer for Aer Lingus is a reasonable one in the current market and we plan to accept it, in the best interests of shareholders," Ryanair chief executive Michael O'Leary (inset) said this morning.

"The price means Ryanair will make a small profit on its investment in Aer Lingus."

He said the offer was "timely" because its original strategy of using Ryanair as a mid-priced brand to compete with flag carriers at major airports had been overtaken by its own Always Getting Better programme with a similar aim.

The revamp, also intended to improve its image and attract business customers, is credited with helping latest annual earnings soar by 66pc.