By Rebecca Burn-Callander Tuesday, 12 February 2013

Ryanair bid for Aer Lingus gets shot down in flames

Ryanair has revealed that the European Commission plans to block the budget airline's bid for rival Aer Lingus. Ryanair boss O'Leary is not happy.

The official decision isn’t due until the end of February but apparently Ryanair has been left in no doubt as to what the EC's conclusions will be. Why so unfriendly? Well, the bods over at Ryanair have been overheard mumbling things like ‘politically-motivated’, ‘Irish government,’ and ‘anti-competitive, my arse’.

The Irish government owns a 25% stake in Aer Lingus, the object of Ryanair’s affection, and has previously complained that a takeover would breach competition laws in the country: Ryanair’s market share would lift considerably as a result.

But Ryanair argues that this is stuff and nonsense. The no-frills airline already owns 30% of Aer Lingus after all, giving it a vested interest in the company’s fortunes already. And this is the third time in six years that Ryanair has made a bid for the business; O’Leary insists that he has now addressed all the concerns raised by the EC.

Should the deal go ahead, Ryanair will hand over several of its routes out of Gatwick Airport to BA owner IAG, and give up to 43 of its newly-acquired Aer Lingus routes to Flybe. ‘Given Ryanair's remedies package clearly addresses every issue raised in the EU's Statement of Objections, any decision to prohibit would be manifestly unfair and in contravention of EU competition rules,’ says Ryanair spokesman Robin Kiely.

Of course, Aer Lingus’ opposition to the deal may [read: does] have more to do with its long-term rivalry with Ryanair than any quibbles over competition law. And O’Leary has certainly not been making any friends at the Irish airline with recent pronouncements like, ‘Aer Lingus doesn't have a future except as part of one of the big five airline groups in Europe.’

It has also become clear that Aer Lingus boss Christopher Mueller would rather do practically anything – even withhold €50m in dividend payouts – than end up in Ryanair’s clutches.

But O’Leary is nothing if not persistent. He has already made it clear that Ryanair plans to appeal any prohibition decision from the EC, and that he will take it all the way to the European Courts if Commissioner Almunia and his case team do not rule in his favour.

We’ll keep you posted on the wranglings as they happen.

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