Ryanair braced for heavy fine from EU

RYANAIR believes it will have to pay out millions of euro as its worst fears have been confirmed in its "state aid" battle with the EU Commission, which could also impinge on the future growth of Cork, Shannon and Dublin airports.

And the results of the EU investigation into whether the airline received unfair state aid at its Belgian Charleroi hub, some 40 km south of Brussels, could wipe hundreds of million euro off the company's value.

Ryanair shares fell 25 cents to €6.75 yesterday.

Ryanair's head of regulatory affairs Jim Callaghan speaking of potential fines said: "It's going to be in the millions."

The airline intended to appeal if the Commission's decision went against it, he added. The decision is due on February 3. Mr Callaghan said the EU regulators plan to declare illegal Ryanair's reduced landing fee at Charleroi airport, increase its ground-services fee, limit other benefits to three years from 15 and order the carrier to repay millions of euro.

"Our worst fears are being confirmed," Mr Callaghan said.

A leading analyst with an Irish stockbroking house said the news had the potential to send the share price falling to €6 and but said that at this price, and up to €6.50, it still offered good value.

The analyst said the ruling will have a serious impact on all State-owned airports including Dublin, Cork and Shannon, as they will be forbidden from giving special deals to help develop new routes and will have to charge all customers the - "rack rate" - full price charges.

This could in turn open up opportunities for Kerry, Waterford and Knock regional airports who will not be hamstrung in this way.

"About 82% of Ryanair passengers pass through private airports so the impact will not be that great and I think people will be paying more attention to the company's news on its trading to March when it releases results next week," the analyst added.

The government of the Belgian region of Wallonia, which owns Charleroi, said it expected the Commission to rule against the landing- fee discounts and order a reduction in the duration of Ryanair's 15-year pact with the airport.

Francoise Zonemberg, a spokeswoman for the Walloon government said the EU's Brussels-based competition watchdog plans to approve other parts of the 2001 accord, including marketing and training aid.

Ryanair pays a €1 landing fee at Charleroi per passenger, about half the official rate, and a ground-services fee of the same amount.

It has also secured aid of more than €1 million for recruiting and training crew and meeting hotel and living expenses for staff.

Ryanair has called on members of the European Low Fares Airline Association to urge the commission to change its draft ruling, according to Mr Callaghan.

The lobby group, established yesterday in Brussels, has 10 members including Ryanair, TUI AG unit Hapag Lloyd Express and Transavia airlines CV, a unit of KLM.