An unlikely champion

The appearance on the Aer Lingus share register of Denis O'Brien is a welcome fillip to the massed ranks of those opposed to …

The appearance on the Aer Lingus share register of Denis O'Brien is a welcome fillip to the massed ranks of those opposed to the takeover of the airline by Ryanair.

His stake of just over 2 per cent brings the combined shareholding of those ranged against Ryanair to some- thing in the region of 45 per cent. They still have some way to go before they cross the 50 per cent threshold needed to block Ryanair from gaining control, but the odds on the low-cost carrier succeeding are surely lengthening.

Mr O'Brien's stated reasons for entering the fray at this stage are pleasingly altruistic if somewhat paradoxical. He has said that he believes in competition and is backing the staff pilots and management in their opposition to the takeover.

While Mr O'Brien's credentials as a free marketer can not be in any doubt, there are few who would have predicted that he would ever find himself in the trenches with Siptu and Impact, which represent the majority of the Aer Lingus staff and are orchestrating their role in the defence. Indeed Mr O'Brien's efforts to take over Eircom in 2001 were vehemently opposed by the company's unionised staff who opted instead for a consortium led by Sir Anthony O'Reilly.

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The entrepreneur - who favours private jets - had become something of a bête noire of the trade union movement after moving abroad to avoid paying tax on the €317 million he made when he sold his non-unionised mobile phone business in 2000.

This money is of course the basis of the fortune into which he has now dipped to buy his Aer Lingus shares. While this must cause Mr O'Brien some amusement, it is unlikely to be the main factor in his decision to risk €32 million.

It is all too easy - given the colourful nature of the protagonists and the supercharged nature of some of the rhetoric - to lose sight of what is really at stake. The net issue, and the one which appears to have found its unlikely champion in Mr O'Brien, is competition in the provision of air services to and from the State.

And the sober truth is that almost any conceivable outcome to the current battle will see a lessening of this competition. Ryanair has made clear that it is quite prepared to stay on as a significant minority shareholder if it does not obtain outright control. This would be disruptive to Aer Lingus at best, and potentially damaging.

It is equally hard to see how the other likely outcome - Ryanair taking control of Aer Lingus - would enhance competition, despite the reassurances given by Ryanair.

On balance, an independent Aer Lingus, albeit with Ryanair as a significant shareholder, appears to be the outcome that most would prefer, although not all for the same reason. It also holds out the best prospect of continued competition. And as of yesterday it was looking increasingly likely, thanks to the intervention of Mr O'Brien.