01/12/2008

Ryanair Flies Into Takeover Turbulence

There's a multi-million euro bid for Aer Lingus on the table today as budget airline Ryanair makes a fresh takeover offer.

The all-cash offer would value Aer Lingus at €748m euros (£619m) a lot less than the previous offer for Aer Lingus, which valued it at €1.5 billion.

While Ryanair's most significant Irish presence is at its Dublin Airport base, it also flies from George Best Belfast City Airport and City of Derry in Northern Ireland.

If it were to achieve overall ownership of its existing competitor, the major hub that Aer Lingus opened last year at Belfast International Airport would bring significant benefits and a broader range of services.

However, it also emerged that if the deal were to go ahead both airlines would continue to operate as separate companies with their own brands.

Ryanair's last bid for the airline was blocked by the European Commission on competition grounds with Rynair now responding that since its last offer was blocked by the Commission, there had been big changes in the sector.

The proposed deal comes on top of a turbulent few months at Aer Lingus, with staff at the point of national strike action as their management set out a series of swinging cut-backs and out-sourcing of jobs.

A compromise deal was only just finalised last month, but any new owner would still be likely to encounter a troubled few months, as a large number of jobs are still to be lost, after the unions agreed a deal to cut costs.

Previously, the EC judgment said that the combined airline would have controlled more than 80% of European flights to and from Dublin airport.

However, speaking to the media today, Ryanair boss Michael O'Leary said: "The world has changed dramatically over the past two years, as high oil prices and deep recession have caused a flood of airline bankruptcies, consolidations and capacity cutbacks.

"Aer Lingus, as a small, stand-alone, regional airline has been marginalised and bypassed as most other EU flag carriers consolidate," he claimed.

Ryanair already owns 29.82% of Aer Lingus with other major shareholders including the Irish government and Aer Lingus employees, both of which rejected the takeover offer last time.

See: Deal At Aer Lingus Ends Strike Threat

(BMcC/KMcA)

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