Give up 'destabilising' stake, Aer Lingus tells Ryanair

Aer Lingus today called on rival carrier Ryanair to finally give up its stake in the airline after two failed take-overs.

Shares in the former flag carrier nose-dived on the Irish Stock Exchange today after the company revealed losses of €107m for last year, blaming high fuel prices and its massive long-term cost-savings plan.

The airline also warned it was preparing itself for possible further losses this year.

And in a swipe at its main competitor Aer Lingus chief executive Dermot Mannion said: “(Ryanair) Their bid, having been defeated twice, it simply doesn’t make sense for them to continue as shareholders.”

Ryanair lodged an audacious but ultimately unsuccessful €748m bid for Aer Lingus late last year – its second failed takeover attempt.

And detailing the poor annual results, Aer Lingus went even further in distancing itself from Michael O’Leary’s budget carrier insisting it had no plans to follow Ryanair’s lead of abandoning airport check-in desks or charging customers for using toilets mid-flight.

And Mr Mannion followed that attack by effectively branding the Ryanair stake destabilising.

The low-fares rival has a 30% holding, with the Government keeping its 25%, and the Aer Lingus boss claimed a small movement in the amount of shares bought or sold had a disproportionate effect on the price, as there were so many large blocs of shares not in the market.

“All of those circumstances are contriving to create the situation we have today on share prices,” Mr Mannion said.

Aer Lingus chief financial officer Sean Coyle backed up his boss’s assessment.

“We don’t see ourselves going down the same road as Ryanair,” he said.

“We’re a customer friendly airline, we’re very keen to maintain our relationship with customers and in particular people with families, so we don’t see ourselves going down that line at all.”

Aer Lingus shares dropped from 79 cent to 59 cent today in Dublin after the airline announced pre-tax losses for last year of €120m. The carrier made a profit of €105m in 2007.

But Mr Mannion questioned the stock market value and claimed the true value of Aer Lingus’ cash balance sheet, fleet and brand were being fundamentally undervalued.

“Falling consumer demand in key markets, a weakening dollar and sterling, and increased competition across the network combined to put sustained and significant pressure on our business throughout the year,” Mr Mannion said.

Aer Lingus said it expects fares to fall by as much as 10-12% this year in a bid to lure cash-strapped passengers looking for better travel deals in the global economic downturn.

The carrier said its business had also been hit by the one-off €140m deal to restructure the company, which includes reducing the wage bill and offering redundancy to some staff.

But Mr Mannion claimed savings from the restructuring will hit €52m.

Detailing its annual returns, Aer Lingus said pre-tax losses were €120m, fuel costs rose 60% and passenger numbers increased by 7.5% to 10 million.

The airline claimed ticket sales were slow so far this year as holiday-makers were waiting until the last minute to book, given the uncertain economic climate.