Ryanair confident of Aer Lingus merger go-ahead

Michael O'Leary says he is confident the merger will go ahead. Picture: PA
Michael O'Leary says he is confident the merger will go ahead. Picture: PA
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RYANAIR is confident of getting the green light from European regulators to press ahead with its bid for rival Aer Lingus after offering an “unprecedented” package of measures.

The bullish comments came as the Irish budget carrier raised its full-year profit forecast following a strong performance over the festive season.

It now expects to deliver a profit of “close to” €540 million (£461.7m) for the year to March, up from an earlier estimate of between €490m and €520m, despite predicting a 19 per cent rise in fuel costs.

Chief executive Michael O’Leary said a “radical and unprecedented” package of remedies had been presented to the European Commission in a bid to win approval for its takeover offer, having made two previous attempts to secure a deal.

He said: “The remedies involve two upfront buyers each basing aircraft in Ireland to take over and operate a substantial part of Aer Lingus’ existing route network and short-haul business.

“This will be the first EU airline merger which will deliver structural divestitures and multiple upfront buyers. We look forward to completing our offer for Aer Lingus subject to receiving approval from the EU competition authorities in early March.”

Rival outfit Flybe last week confirmed it was in talks with Ryanair about taking over aircraft and routes if the Dublin-based airline succeeded with its latest approach.

Ryanair currently owns about 30 per cent of Aer Lingus and launched its €694m offer in June, arguing that consolidation in the airline sector meant its rival’s long-term future would be secured if it became part of a larger group. Its first approach was blocked by European regulators in 2007, while a subsequent bid in 2009 was withdrawn.

Details of its attempt to assuage regulators’ concerns over its latest bid emerged as the carrier posted a profit after tax of €18.1m for the three months to 31 December, up from €14.9m a year earlier, on revenues 15 per cent higher at €969m.

Average fares during the period rose 8 per cent, ahead of the 3 per cent rise predicted by analysts, and passenger numbers grew 3 per cent to 17.3 million.

The airline has grounded up to 80 aircraft this winter as a result of high oil prices, airport fees at Stansted and Dublin airports and expectations for seasonally weaker demand.

As a result, it expects traffic will be 3 per cent lower in the current quarter, which is equivalent to around 400,000 passengers.

Espirito Santo analyst Gerald Khoo said: “We see scope for the positive earnings momentum to continue and for Ryanair to benefit from any further re-rating of the airlines on the back of improved market risk appetite.”

Ryanair flies from 51 bases and will be the only passenger airline operating out of Prestwick from 1 March after Wizz Air said it was switching to Glasgow airport in a bid to win more customers.

Meanwhile, rival EasyJet confirmed yesterday that chairman Sir Michael Rake is to stand down in the summer after three years in the post. Rake survived an attempt by founder and major shareholder Sir Stelios Haji-Ioannou to have him ousted from the board last year, and said it had been a “tremendous experience” to chair the budget carrier over the past three years.