Ryanair is Aer Lingus’s best bet, says O’Leary

RYANAIR chief executive Michael O’Leary has reiterated his belief, in front of the Joint Oireachtas Committee on Transport, that his airline’s €1.40 per share takeover offer was the best way for Aer Lingus to effectively grow as a business in the coming years.

Arguing that British Airways, Air France, Lufthansa and Ryanair will be the four big European airlines after merger and consolidation in the European aviation sector in the coming years, Mr O’Leary said that Ireland will be one of four countries represented by one of the ‘big four’ and that a deal with Ryanair provides an opportunity to allow Aer Lingus to share in that success.

Strong opposition from members of the committee included the statement that it is, apparently, in the national interest for two separately owned Irish airlines to exist in competition and the accusation that Ryanair was looking to kill off the same competition in the Irish market that it had helped introduce 20 years ago.

In response, Mr O’Leary said that the deal was about building an Irish aviation company which owned two well-run and well-performing airlines. He pointed out that the notion of two competing brands under the same ownership was not a new concept.

When asked — after saying that Ryanair didn’t need Aer Lingus to grow further — why his airline wouldn’t rather save money and let Aer Lingus slowly die out naturally, as he claimed would happen if it wasn’t ‘helped’, Mr O’Leary said that Ryanair had the value of a 29% share-holding to protect.

While the acceptance — or otherwise — of the Government to sell its 25% stake in Aer Lingus to Ryanair is seen as the main sticking point for any deal, Ryanair is understood to be seeking meetings with the top 10-15 shareholders in Aer Lingus — including businessman Denis O’Brien — and the former State airline’s ESOT (Employee Share Ownership Trust) to gain support of a sale. One industry insider said yesterday that winning support for its offer from the Aer Lingus ESOT, which is the third largest shareholder behind the Government and Ryanair itself, could prove to be the pivotal point in the bid.

Earlier this week, NCB Stockbrokers said that the European Commission should pass the deal this time around, if the Government and other main shareholders in Aer Lingus were to give the green light.