Aer Lingus seeks EU clarification

Aer Lingus has written to the European Commission to seek clarification about whether the Brussels-based body has the power to force Ryanair to sell some or all of its 29.44 per cent stake in the company.

"I can confirm we have received a notice about failure to act, and we will reply by October 17th," commission spokesman Jonathan Todd said yesterday.

In June the commission blocked Ryanair's proposed takeover of Aer Lingus, but said it did not have the legal right to force the Michael O'Leary-led airline to sell or reduce its then 25 per cent shareholding.

Ryanair has since increased its shareholding in Aer Lingus, and is seeking to have its rival hold an egm to reverse its decision to axe its Shannon-Heathrow route.

This move has been resisted by Aer Lingus on competition grounds.

It is understood that Aer Lingus wrote to the commission two weeks ago requesting a clarification on whether Brussels has jurisdiction to force Ryanair to sell or reduce its stake.

An Aer Lingus spokesman said: "It is true that Aer Lingus is in active discussions with the commission, but it would not be appropriate to comment further at this stage."

Aer Lingus is believed to be considering legal action if the commission confirms that it does not have the power to force Ryanair to sell its shares.

It is not clear if this action would be taken against the commission or if Aer Lingus would pursue a case in a national jurisdiction, possibly Ireland, the UK or Germany.

Ryanair is the biggest shareholder in Aer Lingus, and invested about €400 million in the company. Mr O'Leary has said that he would resist any attempt to force Ryanair to sell shares in its low-cost rival.

Ryanair recently lodged an appeal to the commission's decision to block the takeover with the EU Court of First Instance.

In a statement to The Irish Times, Ryanair said: "Given that the board of Aer Lingus has recently broken Irish company law by twice rejecting Ryanair's request for an egm it would be impossible for AL to claim that we have any influence or control over Aer Lingus.

"We presume this initiative is designed to cover Aer Lingus's embarrassment at a current share price of €2.35, having rejected Ryanair's offer of €2.80 almost one year ago." - ( Additional reporting Reuters)