Ryanair’s stake in rival ‘worthless’

Ryanair chief executive Micheal O’Leary said that the company’s stake in rival airline Aer Lingus might be worthless and that his airline has received less justice than the Birmingham Six.

Mr O’Leary’s outbursts followed an order by the UK’s Competition Commission to rid itself of more than €200m of Aer Lingus shares.

The commission found that Ryanair’s 29.8% in Aer Lingus affected the former national airline’s policy and strategy, and ordered it to sell all but 5% of the stake.

Mr O’Leary has vowed to appeal against the “bizarre and manifestly wrong” order, opening the prospect of a legal battle that could last years.

“This prejudicial approach to an Irish airline is very disturbing, coming from an English government body that regards itself a model competition authority,” he said yesterday.

Aer Lingus welcomed the decision, saying Ryanair had used the stake as a Trojan horse to plot its bids.

An outraged Mr O’Leary compared the order that he sell a rival airline’s shares with the Birmingham Six, who were wrongfully imprisoned for 20 years.

“We are being told we have to sell down below 5% of an Irish airline with only four routes to the UK and now a trustee would be appointed to do the sale,” he said.

“The Birmingham Six got more justice than we get in this process.”

He went on to say that Ryanair had been trying to sell its stake in Aer Lingus but that nobody was interested in buying a “peripheral” airline. In an interview on Bloomberg, He said the stake may be “worthless” if no buyer comes forward.

Ryanair argues that Aer Lingus plays an insignificant role connecting the UK and Ireland, serving just six routes, while Ryanair maintains a major network.

Mr O’Leary criticised the commission for not intervening when British Airways won permission to purchase BMI last year to gain a greater foothold at Heathrow, Europe’s busiest hub.

When the UK commission published its preliminary report in May, it sought views on remedies, which could have included the full or partial sale of the Aer Lingus stake.

The regulators typically give companies as long as a year to sell down a stake. Ryanair may be able to delay the enforcement of any UK ruling for years while it challenges the EU decision to block its most recent bid.

“We consider that there is a tension between Ryanair’s position as a competitor and its position as Aer Lingus’s largest shareholder, and that Ryanair has an incentive to weaken its rival’s effectiveness as a competitor,” the commission said in its final ruling yesterday.

Possible buyers of the stake that Ryanair must sell include Etihad Airways, the Middle Eastern carrier that has been buying holdings in airlines from Germany to Serbia and the Seychelles.

Abu Dhabi-based Etihad already owns just less than 3% of Aer Lingus, though Mr O’Leary has said the airline has made no offer for Ryanair’s stake.

Additional reporting Bloomberg

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