Ryanair bid falls short airline’s value

RYANAIR could be forced to up its bid for Aer Lingus whose value has soared more than €70 million since last week’s takeover approach.

Although Aer Lingus shares closed down 1.3% yesterday, its share price has now soared to €1.53, a significant rise from the €1.40 per Aer Lingus share Ryanair offered for the airline last week.

Some analysts believe Ryanair may have to up its offer considering the rise in share price.

At the time of the takeover proposal last week Ryanair said its offer represented a premium of about 28% over the average closing price (€1.09) of an Aer Lingus share for the 30 days to November 28.

Ryanair chief executive, Michael O’Leary has, however, already ruled out upping his bid for Aer Lingus.

Ryanair closed down 0.62% to €3.23 last night.

Also yesterday, Ryanair said it will stop serving Fuerteventura in Spain’s Canary Islands following a dispute with a local tourism organisation.

Ryanair will end nine routes to Fuerteventura starting on January 31 after the AIE tourism group failed to honour an agreement to promote the islands as a tourist destination.

The airline has already cancelled one of its Dublin flights to Fuerteventura on November 6 and will stop further services from cities including Birmingham and Liverpool, England, and Frankfurt-Hahn.

Meanwhile, Virgin Atlantic, which is interested in buying BMI said it is in talks with the British airline’s majority owner, Germany’s Lufthansa, about the future of the airline.

The news added another thread to the industry’s current wave of merger mania, coming a week after British Airways and Australia’s Qantas Airways said they were in merger talks to create the world’s biggest airline.

“These discussions may or may not lead to an agreement and a further announcement will be made in due course,” Virgin Atlantic said.

Its chief executive Steve Ridgway told Reuters in October a tie-up with BMI would be a “very compelling opportunity” that would make his airline a stronger competitor to London Heathrow kingpin British Airways.

Virgin believes its long-haul operations would sit well with BMI’s predominantly short-haul business.

Virgin is particularly interested in BMI’s slots at Heathrow which, at 12%, is more than Virgin’s 3% share, but much less than BA which has over 40%.