Ryanair ups ante in Aer Lingus bid

Ryanair is offering Flybe Group €100m and use of Aer Lingus’s brand name for three years in a bid to secure EU consent to complete its €800m takeover of the national airline.

In a final bid to win EU competition commissioner Joaquin Almunia’s approval to take over Aer Lingus, Ryanair chief executive Michael O’Leary is offering unprecedented concessions to secure his plans to purchase the carrier. The commission has set a Mar 6 deadline for its decision.

The Irish Examiner has confirmed that Ryanair is prepared to concede as much as 50% of Aer Lingus’s profitability to Flybe and British Airways.

Ryanair plans to off-load to British Airways all Aer Lingus and Ryanair routes from Gatwick to Ireland, and up to 43 Aer Lingus routes, with 12 aircraft and 1,500 staff to Flyby on other short-haul routes.

Ryanair has battled for almost five years to win control of Aer Lingus, and now, Mr O’Leary’s strategy is raising concerns within Ryanair that the carrier is conceding far too much to take over Aer Lingus.

Ryanair had planned to off-load valuable Heathrow slots to British Airways to appease EU authorities, but this concerned Transport Minister Leo Varadkar, who sees the Heathrow slots as crucial to Ireland’s transport infrastructure.

Under the new strategy, Ryanair will retain ownership of these slots if Aer Lingus is acquired.

The Government owns 25% of Aer Lingus and plans to sell it off as part of a government strategy of divesting state assets. Up to now, the Government has not been prepared to sell to Ryanair, who has a 30% stake in the company.

Ryanair, British Airways, and Flybe would not comment last night.

An analyst with Merrion Capital, David Holohan, who has a “buy” rating on Aer Lingus and a “neutral” rating on Ryanair said: “The level of concessions being offered now are unprecedented for the industry, without a doubt.

“It shows how committed Ryanair is to doing a deal and willing to do whatever it takes to getting it over the line.”

Mr O’Leary has said he would like to bring the low- cost model to transatlantic services. An Aer Lingus takeover would also expose Ryanair to Airbus aircraft and give it leverage when negotiating for planes.

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