Ryanair readies for Aer Lingus legal action

RYANAIR has threatened to take Aer Lingus to court over its decision to reject Ryanair’s request for an extraordinary general meeting over the pull-out from the Shannon-Heathrow route.

In a letter to Aer Lingus chairman John Sharman, Ryanair secretary Jim Callaghan said the rejection was unlawful. “We have referred this unlawful behaviour to our legal advisers and will consider with them whether we should pursue our shareholder rights under the Companies Act 1963 or through the courts.”

Mr Callaghan said Aer Lingus management does not have any discretion in the matter and that Aer Lingus’s articles of association and the Companies Act oblige the board of the airline to comply with any request from a shareholder owning 10% or more to hold an EGM, at any time.

“Your claim that the holding of an EGM would infringe competition law is of course absurd,” Mr Callaghan said. “Aer Lingus will shortly call an EGM to approve your long-haul aircraft order. Ryanair will be perfectly entitled to attend and vote at this EGM without in any way compromising competition law.

“Indeed, to follow your ridiculous line of argument, you and your fellow directors of Aer Lingus would have already breached competition law by having permitted Ryanair to participate and vote at this year’s AGM. Aer Lingus appears to invoke competition concerns only when it suits your purposes, regardless of how absurd or legally untenable these claims are.

“The fact that our proposed EGM motion would promote competition between Ryanair and Aer Lingus on the Shannon- London city-pair removes any question or possibility of an infringement of competition law.

“Since Ryanair only owns 29.4% of Aer Lingus, we can easily be outvoted by other shareholders at any such EGM. Furthermore, since Ryanair has never sought, nor seeks any agreement with Aer Lingus, the issue of competition law does not at any time arise.”

Mr Callaghan said Aer Lingus’s refusal to allow shareholders to discuss the withdrawal of the Shannon- Heathrow route at a time when the company’s interim profits have “collapsed” by 58% from €16m in 2006 to €6m in 2007 was “inexplicable”.

“Perhaps this rejection has more to do with Aer Lingus’s desire to avoid any shareholder discussion of these lamentable interim results or this precipitous decline in profitability?” he said.

Aer Lingus responded to the Ryanair statement by saying: “It would be completely inappropriate to hold an EGM to facilitate a rival airline in interfering in the affairs of Aer Lingus.”