Ryanair in fresh takeover bid for Irish carrier Aer Lingus (Roundup)

Dec 1, 2008, 12:55 GMT

Dublin - Irish low-cost airline Ryanair announced a fresh bid to take over 100 per cent of privatized Irish national carrier Aer Lingus on Monday.

Ryanair said in a statement that it was offering 1.40 euros (1.78 dollars) per share in its rival, which would value the airline at 748 million euros.

Aer Lingus said it had noted the offer, but had not yet commented on it.

Ryanair claimed the deal would would be worth 325 million euros in cash to shareholders, employees and the Irish government, which owns just over 25 per cent of the airline.

The offer 'will lead to one strong Irish airline group, lower fares for customers, rapid fleet growth and 1,000 new jobs in Aer Lingus,' the statement said.

'It is a sensible strategy for Ireland,' Ryanair chief executive Michael O'Leary told US news channel CNBC.

'Ireland has changed,' he said. Just as the Irish government said it would merge banks to weather the global financial crisis, 'we feel we should put the two airlines together to make a strong national champion,' O'Leary said.

He said only a merged airline would be able to compete with the large merged European carriers like German-Swiss Lufthansa-Swiss and French-Dutch airline Air France-KLM.

'Aer Lingus, as a small, standalone, regional airline has been marginalized and bypassed as most other EU flag carriers consolidate,' he said.

O'Leary said Ryanair would double the size of Aer Lingus' short- haul fleet from 33 to 66 aircraft over the next five years, which would create the jobs.

Ryanair is a major shareholder in Aer Lingus with a 29.8-per-cent stake in the company.

Aer Lingus reported a loss of 22.3 million euros for the first six months of 2008, down from a profit of 2.6 million euros in the same period of 2007, owing to the rise in the cost of fuel, the company said.

The company is currently in dispute with its employees over a cost-cutting plan.

Ryanair's previous offer from September 2006 was resisted by the Irish government, which had just floated the airline at the time, and by the airline itself, which called it 'ill-conceived, contradictory and anti-competitive.'

The proposed deal was rejected by the European Commission as uncompetitive.

Jonathan Todd, spokesman for Competition Commissioner Neelie Kroes did not say Monday if Ryanair and the European Commission were in contact about the latest takeover bid.

'As in any merger or takeover case, it is the responsibility of the parties to verify whether or not it falls into the scope of the merger regulation and whether they therefore need to inform the commission,' Todd said.

In response to O'Leary's claim earlier Monday that the commission would look more favourably on the current bid as the economic conditions had changed since 2006, Todd said: 'Every bid is dealt on a case-by-case basis.

'Merger regulation requires the European Commission to ensure that no concentration would give rise to adverse effects on competition, such as reduced choice for customers or higher prices.

'I am not going to preempt a decision on a deal of which we don't yet have any details.'

The 2006 offer is currently under appeal at the European Court of First Instance.