Takeover Panel rules out parts of Ryanair bid

The State’s Takeover Panel today ruled out elements of Ryanair's offer for Aer Lingus, saying sweeteners included in its initial proposals could breach takeover rules by favouring one shareholder, namely the Government.

Aer Lingus's board has rejected Ryanair's all-cash bid of €1.40 a share, arguing it significantly undervalued the airline.

The Takeover Panel said Ryanair's pledges to give the State control over Aer Lingus's valuable landing slots at London Heathrow, and to provide bank guarantees to cut the carrier's fares and abolish fuel surcharges, would favour the Government.

"Consequently, the panel has given a direction ... to Ryanair prohibiting it from extending these undertakings," the Takeover Panel said in a statement.

The panel also said Ryanair should drop promises to recognise trade unions at Aer Lingus and restore flights between Shannon and Heathrow - unless it can clarify to whom the pledges have been made and that they meet takeover rules.

Unions, who are not recognised at Ryanair, have rejected the guarantees and remain concerned over job prospects. Europe's biggest budget airline tried to buy Aer Lingus in 2006 for double the price of its current bid, but was thwarted by an EU ruling that it would create a near monopoly in European flights out of Dublin.

Aer Lingus chairman Colm Barrington earlier accused Ryanair's chief executive of misrepresenting the performance of the former semi-state airline.Mr Barrington said a number of points made by Micheal O'Leary in relation to Aer Lingus were incorrect.

"He said we were cutting back on our routes: he is wrong. Since 2006 we have increased our routes from 85 to 105.

"He said we were cutting back on our fleet: he is wrong. Since 2006 we have increased our fleet from 35 to 42 aircraft", Mr Barrington said on RTE's Morning Ireland.

His comment on radio followed an interview in today's Irish Timesin which Mr Barrington said he was looking for a friendly investor to take a majority stake in the airline to prevent Ryanair from bidding again for Aer Lingus.

He told RTÉ the current Ryanair bid of €1.40 per share was "ridiculously" cheap although he declined to detail what he considered a fair offer.

Aer Lingus has €1.3 billion in the bank he said and an offer of €1.40 per share would allow Ryanair to buy the remaining 70 per cent of the airline for €525 million "pay himself back the money and still have nearly €800 million additional cash in the bank".

"What I want to do is to ensure that Micheal O'Leary and Ryanair are not in a position to keep harassing us".

He pointed out Irish consumers own 25 per cent of Aer Lingus and said that "if Michael O'Leary does what he trying to do they'll get ripped off in his bid and then they'll get monopolised for the rest of their lives."

Mr Barrington repeated his assertion that he would not allow the "current situation to continue".

Ryanair currently owns 29.8 per cent of Aer Lingus and last week tabled an offer to buy the airline for €748 million.

He told The Irish TimesAer Lingus had been examining a number of "strategic options" for some time.

"I haven't seen any perfect partner for Aer Lingus yet that I'd be happy to support," he said. "There are possibilities, but there is still work to be done."

Air France-KLM has been tipped by analysts as a potential rival bidder.

Mr Barrington said that from a "consumer point of view" and a "country point of view", Air France-KLM "would be a better option than Ryanair", but "I haven't got a call yet".

Mr Barrington and the airline's chief executive Dermot Mannion met Minister for Transport Noel Dempsey yesterday afternoon to outline their opposition to Ryanair's offer.