Dublin - Irish low-cost airline Ryanair announced a fresh
bid to take over 100 per cent of privatized Irish national carrier
Aer Lingus on Monday.
Ryanair said in a statement that it was offering 1.40 euros (1.78
dollars) per share in its rival, which would value the airline at 748
million euros.
Aer Lingus said it had noted the offer, but had not yet commented
on it.
Ryanair claimed the deal would would be worth 325 million euros in
cash to shareholders, employees and the Irish government, which owns
just over 25 per cent of the airline.
The offer 'will lead to one strong Irish airline group, lower
fares for customers, rapid fleet growth and 1,000 new jobs in Aer
Lingus,' the statement said.
'It is a sensible strategy for Ireland,' Ryanair chief executive
Michael O'Leary told US news channel CNBC.
'Ireland has changed,' he said. Just as the Irish government said
it would merge banks to weather the global financial crisis, 'we feel
we should put the two airlines together to make a strong national
champion,' O'Leary said.
He said only a merged airline would be able to compete with the
large merged European carriers like German-Swiss Lufthansa-Swiss and
French-Dutch airline Air France-KLM.
'Aer Lingus, as a small, standalone, regional airline has been
marginalized and bypassed as most other EU flag carriers
consolidate,' he said.
O'Leary said Ryanair would double the size of Aer Lingus' short-
haul fleet from 33 to 66 aircraft over the next five years, which
would create the jobs.
Ryanair is a major shareholder in Aer Lingus with a 29.8-per-cent
stake in the company.
Aer Lingus reported a loss of 22.3 million euros for the first six
months of 2008, down from a profit of 2.6 million euros in the same
period of 2007, owing to the rise in the cost of fuel, the company
said.
The company is currently in dispute with its employees over a
cost-cutting plan.
Ryanair's previous offer from September 2006 was resisted by the
Irish government, which had just floated the airline at the time, and
by the airline itself, which called it 'ill-conceived, contradictory
and anti-competitive.'
The proposed deal was rejected by the European Commission as
uncompetitive.
Jonathan Todd, spokesman for Competition Commissioner Neelie Kroes
did not say Monday if Ryanair and the European Commission were in
contact about the latest takeover bid.
'As in any merger or takeover case, it is the responsibility of
the parties to verify whether or not it falls into the scope of the
merger regulation and whether they therefore need to inform the
commission,' Todd said.
In response to O'Leary's claim earlier Monday that the commission
would look more favourably on the current bid as the economic
conditions had changed since 2006, Todd said: 'Every bid is dealt on
a case-by-case basis.
'Merger regulation requires the European Commission to ensure that
no concentration would give rise to adverse effects on competition,
such as reduced choice for customers or higher prices.
'I am not going to preempt a decision on a deal of which we don't
yet have any details.'
The 2006 offer is currently under appeal at the European Court of
First Instance.
USA
Your Talkback on this Story