Local opposition to Aer Lingus takeover bid

RYANAIR’S €694 million offer for Aer Lingus has potentially huge consequences for Shannon Airport and some local interests have told The Clare Champion they are opposed to it.

For the current summer season, there are 20 scheduled services to and from Shannon, 17 of which are provided by Aer Lingus, Aer Lingus Regional (an arrangement under which Aer Arann operates flights to Britain and France on behalf of Aer Lingus) or Ryanair.
All flights to and from Britain and Europe are currently operated by one of the two airlines.
Should the purchase go ahead, one company would have a huge amount of control over services to and from Shannon and in a statement issued on Wednesday, the board of Aer Lingus stated that allowing the purchase to continue would have serious implications for competition.
“Ryanair’s 2006 offer was prohibited by the European Commission on competition grounds and the board believes the reasons for prohibition are now even stronger than before; the number of routes that Ryanair would monopolise has sharply increased. The board has received legal advice that the UK Competition Commission is likely to require Ryanair to sell down its current stake.”
The statement also said the bid undervalued Aer Lingus. “Aer Lingus is a robust and profitable airline with a proven business model, a strong balance sheet and an internationally recognised brand. The board’s unanimous view is that Ryanair’s offer to acquire control of Aer Lingus for €1.30 per share fundamentally undervalues Aer Lingus and represents a significant discount to the intrinsic value of the business.”
The statement also claimed reforms made at Aer Lingus have had the desired effect. “Aer Lingus’ strategy of building a leaner and more efficient business is working. Operation and financial performance has improved greatly since 2009, resulting in a turnaround in operating result since that time of approximately €130 million. We have transformed a loss-making Aer Lingus into a profitable airline with one of the strongest balance sheets in the European sector.”
Speaking to The Clare Champion on Wednesday, Clare TD Michael McNamara said it seems unlikely the purchase would be allowed, as it would create a virtual monopoly at Dublin, Cork and Shannon. “There are real issues around whether the commission would approve it. We can’t prejudge the decision but given the issues that have been raised around the existing Ryanair shareholding in Aer Lingus, it’s very hard to see how the purchase would be approved.”
Deputy McNamara said he wondered if the bid from Aer Lingus was motivated by a UK Competition Commission probe into its 29.82% stake in the airline and a feeling that “the best form of defence is attack”.
Fine Gael’s Pat Breen said the purchase could create serious difficulties. “There is no guarantee that it would continue with the Shannon services, let alone increase them, they could concentrate in Dublin. Ryanair have a huge interest in Shannon and they will be helped by the new road in Galway, which will open up the West of Ireland but it’s something that I wouldn’t support.”
Shannon-based councillor Sean McLoughlin also said he was against the proposal, as he felt a Ryanair buy-out of Aer Lingus could harm Shannon’s connectivity and leave Shannon overly dependent on one company. He said he intends to make his views known to Transport Minister Leo Varadkar in the coming days.
Aer Lingus has 255 employees at Shannon and it’s unlikely they would relish the Ryanair purchase going through.