Ryanair May Up Its Offer to Acquire Aer Lingus

Ryanair, an Ireland-based low cost airline, is aiming to up its offer to acquire its Irish rival airline, Aer Lingus.

Ryanair had previously offered €694 million for Aer Lingus, which was subsequently rejected by the Aer Lingus board as too low a price. However, the budget airline is now willing to offer around 40 routes from major airports in Ireland to other airlines in return for the acquisition.

The airline statement read, ‘This comprehensive remedies package includes a number of new airline bases in Dublin, new entrant competitors on over 40 routes to/from Dublin, Cork and Shannon, as well as specific competition solutions that guarantee increased price competition on routes to and from Ireland.

Ryanair expects that the commission will shortly market test this transformational remedies package, and remains confident that its offer for Aer Lingus will receive competition clearance following any fair assessment by the commission.’

The airline’s acquisition bid is currently being considered by the European Commission, which is expected to come to a decision by January 2013.

The acquisition of Aer Lingus is being reviewed against the backdrop of a volatile airline industry in the EU, with the restructuring of Iberia involving job losses of around 4,500 employees; a takeover of Vueling by IAG, in Spain; the restructuring of SAS with around 6,000 job losses; and the merger of Aegean and Olympic airlines in Greece.

Earlier, Ryanair chief executive officer, Michael O’Leary, said, ‘Consolidation is an essential part of making EU airlines more competitive. It has already taken place in core EU countries via IAG (Iberia and BMI merger), AF\KLM (including their investment in Alitalia) and Lufthansa (via takeovers of Austrian, Brussels Airlines and Swiss). That process is now spreading to peripheral countries as Aegean merges with Olympic in Greece, TAP is sold in Portugal and Ryanair bids again for Aer Lingus.

As part of the EU’s Phase 2 review, which began on August 29, Ryanair has submitted an unprecedented remedies package, under which multiple up-front buyers will commit to open new bases in Ireland, and enter all of the Ryanair/Aer Lingus crossover routes, which are not currently served by other substantial airline competitors. We believe this is the first EU airline merger where the remedies proposed delivers not one, but at least two up-front buyer remedies, and where all of the ‘merger to monopoly routes’ are remedied not just by passive slot divestments but by active up-front buyers and new market entrants.’