Ryanair to appeal if Aer Lingus takeover blocked

Ryanair will appeal any decision by the European Commission to prohibit its takeover of Aer Lingus, the airline said yesterday, as it confirmed that European regulators had indicated they plan to block the deal.

Discussions between Ryanair and the European Commission had been intensifying in recent weeks, with a final decision due before March 6th.

However, Ryanair said yesterday that it had been told by the Commission of its intention to prohibit the deal.

“It appears clear from this morning’s meeting, that no matter what remedies Ryanair offered, we were not going to get a fair hearing and were going to be prohibited regardless of competition rules,” a Ryanair spokesman said yesterday.

Final decision

A European Commission spokesman said a final decision would be made at the end of February or beginning of March.

While Ryanair’s share price stayed relatively steady yesterday, Aer Lingus shares fell as much as 7.3 per cent yesterday, the biggest intra-day drop in almost a year. About 1.8 million shares were traded, more than 3.5 times the daily average during the last three months.

Ryanair declined to comment yesterday on whether it now intends to sell its 30 per cent shareholding in Aer Lingus. Ryanair has already spent €407.2 million on acquiring a 29.8 per cent stake in the airline. It also declined to comment on whether it plans to submit additional concessions to the European Commission before March 6th.

Ryanair’s latest takeover bid for Aer Lingus, represented its third takeover attempt of the company.

The airline’s first attempt was prohibited in 2007 on competition grounds, while it withdrew its second bid in 2009 following Government opposition. The airline was believed to have offered a much more comprehensive remedies package this time around to allay EU anti-trust concerns. This included a deal with Flybe whereby Ryanair would give the British airline €100 million in cash to help acquire half of Aer Lingus’s short-haul business, as well as a commitment from IAG to operate its London-Gatwick routes.

Noting previous aviation merger decisions, Ryanair accused the EU of “holding Ryanair to a much higher standard than any other EU airline”.

In a statement yesterday, Aer Lingus said it was in a much stronger than it was at the time of the previous Ryanair offers and was Ryanair’s only significant competitor on the vast majority of Irish air routes. Last week, the former State airline posted a strong set of full-year 2012 results that saw its operating profit rise 40.7 per cent to €69.1 million.

“The reasons for prohibition are therefore even stronger in this instance than with the previous offers,” Aer Lingus said in a statement yesterday.

Minister for Transport Leo Varadkar said the Ryanair offer did not meet required standards to ease competition concerns. “The Ryanair remedies package as reported has not satisfied the Government’s concerns about connectivity, competition or employment.”

The Government, which owns 25 per cent of the former state airline, had previously voiced its concerns about the merger. It is expected to sell its stake as part of the conditions of the IMF-EU bailout.

Anti-competitive

Cork Chamber yesterday said a Ryanair-Aer Lingus merger would be anti-competitive and bad for Irish business.

Cork Chamber president John Mullins said a favourable decision for Ryanair would effectively leave a single operator in control of the vast majority of commercial flights into and out of Ireland.

The rejection of Ryanair’s bid for Aer Lingus, if confirmed, will be the first time the Commission has blocked a proposed merger twice.