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Sun 29 Jul 2012 10:34 AM

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Ryanair seeks EU nod for 3rd Aer Lingus bid

Abu Dhabi's Etihad has said it will not sell its 2.99 percent stake in the Irish carrier

Ryanair seeks EU nod for 3rd Aer Lingus bid
Budget airline Ryanair has asked EU antitrust regulators to approve its third €694m (US$855m) takeover bid for Aer Lingus.

Budget airline Ryanair has asked EU antitrust regulators to approve its third
€694m (US$855m) takeover bid for Aer Lingus, the Irish carrier that Abu Dhabi’s Etihad Airways owns a 2.99 percent stake in, in what could be an uphill battle after an EU veto against a previous offer.

The European Commission, which acts as EU competition watchdog, said on its website at the weekend it would decide by August 29 whether to clear the deal.

Ryanair, the largest shareholder in Aer Lingus with a 30 percent holding, notified the EU watchdog of its bid last Tuesday.

Aer Lingus, in which the Irish government holds a 25 percent stake, has urged shareholders to reject Ryanair's offer and said the Commission was likely to block it.

The former Irish flag carrier and Ryanair declined to comment on Thursday. Ryanair is likely to have a tough time with EU regulators, said Goetz Drauz, a partner at law firm Wilson Sonsini.

"It will be difficult to convince the Commission. The Commission has a destination by destination approach which means a high combined market share is not acceptable. This is likely to go into phase 2," Drauz said, referring to a lengthy review.

"Unless Ryanair finds convincing upfront buyers for its slots, it may not have a chance," he said.

The combined carrier would control 80 percent of traffic between the UK and Ireland.

The EU executive blocked Ryanair's 2007 attempted takeover of Aer Lingus, saying the combined group would monopolise or dominate 35 routes, leading to consumers paying more. It said Ryanair had not offered to give up enough airport slots to allay its concerns.

Ryanair dropped its second offer in 2009.

Britain's Competition Commission is now investigating Ryanair's minority stake in Aer Lingus while the UK Office of Fair Trading has said that the holding threatens competition in the sector.

Abu Dhabi-owned Etihad Airways said earlier this month it is not willing to sell its 2.99 percent stake in Aer Lingus, which it bought in May, the Financial Times reported, citing the UAE operator's CEO James Hogan.

"We are not selling," Hogan told the FT, adding that Etihad will back Aer Lingus’s current management and its strategy.

“Our equity investments are strategic and long term,” Hogan told the FT. “We have invested due to our view of the Aer Lingus business model and the success the management are having implementing that model. We continue to support that management team.”

Turkish Airlines was last month named as another possible bidder for Aer Lingus, according to a report in the Dublin-based Sunday Business Post newspaper.

* With Agencies

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