Ireland’s Prime Minister Enda Kenny said the Government has competition concerns about a possible Ryanair takeover of rival Aer Lingus.
Ryanair has offered €1.30 per share for the 70 per cent of Aer Lingus it does not already own.
The offer is almost 50 per cent higher than the average price of Aer Lingus shares in the last six months, and well ahead of the €1 per share price that Minister for Transport Leo Varadkar previously indicated would be the minimum price acceptable to the Government.
Shares in Aer Lingus surged today to €1.10 on the Dublin market at 10.30am, a rise of 17.9 per cent, before falling back to €1.06 at 12.30pm. Ryanair shares were up 0.45 per cent to just under €4.00.
“The Government would be concerned obviously in terms of competition, in term of consumer facilities, in terms of price, access to the country,” Mr Kenny said. “But it is a minority share that Government have, we don’t have any veto over this, we don’t have any blocking rights, and the details of the offer made by Ryanair have not yet been considered collectively by Government.”
The Government won’t be forced into a “fire sale” of its stake of Aer Lingus, Mr Kenny said. While Ryanair has improved its bid for Aer Lingus from a previous offer, the Government must consider the best interests of passengers, the Taoiseach added.
Aer Lingus said this morning it would issue a statement “in due course”, and urged shareholders not to take any action.
The Irish Hotels Federation (IHF) said the takeover would harm the tourist industry’s long-term interests. IHF president Michael Vaughan called on the Government to find a suitable buyer to ensure Aer Lingus’ Heathrow slots remained available to Ireland in the future.
“Even if Ryanair were to run the two companies separately, there would be serious monopoly concerns around air transit into Ireland,” says Mr Vaughan. “In terms of the Heathrow slots, these were acquired when Aer Lingus was under state ownership and they are of vital strategic importance to the country and our longterm tourism prospects.
“Ultimately, we what we need is more entrants into the Irish aviation space, not consolidation among the two major airlines.”
Ryanair said yesterday the cash offer was prompted in part by the Government’s plan to sell its 25 per cent holding in Aer Lingus as part of wider disposal of assets aimed at balancing budgets.
The European Commission blocked Ryanair’s previous bid for Aer Lingus on competition grounds, but the airline has argued that circumstances have changed since 2006, with the European airline industry consolidating around five players.
Fianna Fáil’s transport spokesman Timmy Dooley called on the Government to use its shareholding in Aer Lingus to prevent Ryanair from taking control of the airline.
“The existence of Ryanair and Aer Lingus as separate, competing entities has transformed our tourism and business connectivity. Any material change to the separate status of these airlines would inevitably lead to reduced competition, increased fares and less choice,” he said.
