Varadkar: No Etihad negotiations

There has been no contact between the Government and Etihad over the Middle East airline taking a stake in Aer Lingus, according to Leo Varadkar, the minister for transport, tourism and sport.

“We haven’t had any negotiations with Etihad on the disposal of the Government stake; I have met with the CEO of Etihad but on a number of issues, not specifically that, and that was some months ago,” he said.

Earlier this month the chief executive of Etihad, James Hogan, said he would be “very happy to have that conversation with Ryanair about its near-30% stake in Aer Lingus”.

“Dublin is a strong, profitable route for us and we’re very keen to strengthen our partnership there,” he added. Etihad already owns a 3% stake in Aer Lingus.

The European Commission meets on Wednesday to consider Ryanair’s latest €1.30 per share bid for Aer Lingus, which values the former State-owned airline at €694m.

Aer Lingus issued a statement on Friday rejecting Ryanair’s latest bid for the company. It noted that the bid undervalued the airline and would not be a good deal for Aer Lingus shareholders.

“No new information has been provided by Ryanair in relation to the offer since the board last wrote to shareholders on 31 July 2012.

“Based on careful consideration of the issues, and extensive legal and financial advice, the board remains of the view that Ryanair’s offer is not in the interests of shareholders, fundamentally undervalues the business and, due to the scale and extent of competition issues, is likely once more to be prohibited by the European Commission. Accordingly, the board unanimously recommends shareholders take no action in relation to the offer and should not sign any document sent by Ryanair or its advisers,” the statement said.

Ryanair’s bid for Aer Lingus was rejected by the European Commission in 2007 on the basis that it would not be good for competition.

It is still not clear whether Ryanair will cede any routes in an effort to boost its chances before the European Commission on this occasion. However, it is likely that the commission will take 90 days to do a comprehensive investigation of Ryanair’s latest bid.

One aviation analyst, who didn’t want to be named, said Ryanair only has a 30% chance of succeeding with its Aer Lingus bid.

Whether Etihad steps in for Ryanair’s stake in the event its takeover attempt is rejected, remains to be seen. But whether Ryanair is willing to sell will depend on what price the Middle East airline is willing to stump up for Aer Lingus.