O'Leary bullish over fresh bid for Aer Lingus despite EU court ruling

Published on Tuesday 6 July 2010 14:42

MAVERICK Ryanair chief executive Michael O'Leary has refused to rule out a further bid for its Irish rival Aer Lingus, despite a European Union (EU) ruling backing the European Commission's decision to block the takeover.

O'Leary yesterday lost his legal challenge against a 2007 veto by EU regulators against the budget carrier's second attempt to buy its rival.

But the controversial businessman, who welcomed the decision by the EU's General Court that Ryanair could keep its minority stake in Aer Lingus, insisted he would not give up his fight for the carrier.

"This (verdict] will not prevent Ryanair making a future offer for Aer Lingus, but obviously any such offer will have to take account of the court's detailed ruling," he said, adding that the airline had no immediate plan to make a third offer for Aer Lingus as it was unlikely to succeed unless the Irish government sold its 25 per cent stake.

The General Court was ruling on Ryanair's appeal against the European Commission's rejection of its takeover bid and on an appeal by Aer Lingus against the watchdog's dismissal of its request to order that Ryanair divest the Aer Lingus stake.

The battle began in 2006 when Ryanair bought a 19.2 per cent share in Aer Lingus after it was privatised.

Soon afterwards, Ryanair launched a public bid for the entire share capital of the rival firm - but the Commission declared the proposed merger illegal under EU competition rules.

Ryanair bought more shares anyway, taking its stake to 29.3 per cent - prompting Aer Lingus to ask the Commission to order Ryanair to sell its shareholding.

Aer Lingus chairman Colm Barrington said: "It is regrettable that the court has not taken this opportunity to… address the anti-competitive effects of Ryanair's minority shareholding in Aer Lingus, which is contrary to the interests of the majority of our shareholders."

O'Leary believes that Ryanair continues to believe that the long-term financial viability of Aer Lingus can only be secured as part of one strong Irish airline group.

The General Court said the Commission had legal and factual justification not to order Ryanair to sell its shares in the Irish former state carrier after the bid failed.

It also backed the watchdog's veto of Ryanair's takeover bid, saying there had been valid concerns about the deal and claiming the merger would "significantly impede effective competition as a result of the creation of a dominant position on a number of (air] routes from or to Dublin, Cork and Shannon".

Colm Barrington, Aer Lingus chairman, welcomed the takeover ruling but said he was disappointed that Ryanair was not ordered to sell off its stake in the airline.

"(The] rejection by the European Court of Ryanair's appeal confirms that a takeover of Aer Lingus by Ryanair would harm consumers and lead to higher prices on Irish routes," Barrington said.

"It is regrettable that the court has not taken this opportunity to take the further step necessary to address the anti-competitive effects of Ryanair's minority shareholding."