Little confidence in Ryanair’s bid

Analysts are not backing Ryanair to succeed in its Aer Lingus bid.

The airline published a document detailing a formal bid for Aer Lingus yesterday that repeated its €694m offer for the Irish carrier.

Analyst with Dolmen stockbrokers, Ian Hunter, said market reaction to the offer suggested there is little, if any, confidence that the deal will go ahead.

“The Aer Lingus share price has barely moved. It is up by 1% well below the €1.30 that Ryanair are offering per share.

“The implication is that the market does not believe that a deal will go through,” said Mr Hunter.

Ryanair’s Aer Lingus bid is dogged by a number of issues ranging from the Government’s stake to an ongoing investigation into Ryanair’s 29.8% holding in Aer Lingus by the UK Competition Commission.

Mr Hunter said the Government was seen as unlikely to sell its share holding in the airline until the outstanding issues with the company’s pension fund were resolved.

The Government is coming under increasing pressure to sell its 25% stake in Aer Lingus in order to fund the Government’s stimulus plan.

“The minister will consider the formal offer document received today,” said a spokesperson for the Department of Transport.

The department has said that when considering any bid for Aer Lingus it would consider what is best for passengers, taxpayers and the Irish economy.

Ryanair believes its bid would serve the Irish market best, by having a major European airline based in Ireland.

In his offer letter to shareholders, Ryanair chief executive Micheal O’Leary said: “Ryanair believes that as the air transport market in Europe inexorably consolidates into five large airlines/ groups led by Air France, British Airways, easyJet, Lufthansa and Ryanair, the long-term future of Aer Lingus, its brand and its growth prospects can best be secured within one strong Irish airline group, led by Ryanair.”

The other issue in the sale of the airline is whether Etihad will be willing to sell its 3% stake in Aer Lingus or if it will buy the Government’s 25%.

Under European open skies legislation, Etihad cannot own any more than 49% of Aer Lingus.

Etihad said: “We have noted Ryanair’s cash offer for the entire share capital of Aer Lingus. We will continue to monitor the situation but have no comment at this time.”

Transport Minister Leo Varadkar said: “Government is considering the offer. But we’ll have to take into account a number of things. Probably what’s best for the taxpayer in terms of price, what’s best for the passenger in terms of competition and connectivity and cargo.

“And also we have to take into account potential competition ruling. It is something we’re considering. We’re under no obligation to respond for 30 days. Let’s see what else might come out of the woodwork in the meantime.”