Saturday

23rd Jul 2016

Ryanair slams EU's 'political' decision on Aer Lingus bid

  • Almunia said the decision will 'protect the millions of Europeans who travel to and from Ireland' (Photo: andynash)

Budget airline Ryanair has slammed what it described as a "politically motivated" decision by the European Commission to block its €694 million bid to take over rival Aer Lingus.

In a strongly worded statement issued as the bloc's competition chief Joaquin Almunia confirmed the EU's decision on Wednesday (27 February), Ryanair accused him of making a “political” decision to pander to the vested interests of the Irish government."

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The Irish government holds a 25 percent stake in Aer Lingus, while Ryanair already owns 30 percent.

For his part, Aer Lingus CEO Christoph Mueller said that Ryanair's offer "should never have been made."

He also claimed that the Michael O'Leary-fronted airline had "made its offer without any reasonable belief that it could obtain clearance.” The UK Competition Commission is currently investigating whether Ryanair's existing shareholding breaches competition rules.

Explaining the decision to reporters, Almunia said that the decision would "protect the millions of Europeans who travel to and from Ireland." He added that the merger would have "directly harmed passengers, who would have had to pay higher fares."

Despite this, Ryanair has already signalled its intent to appeal the case to the EU's General Court in Luxembourg.

In its statement, the budget airline claimed that it had offered "an historic and unprecedented remedies package that included not one, but two upfront buyers (BA/IAG & Flybe) to take over approximately half of Aer Lingus’ short-haul business."

However, commissioner Almunia insisted that allowing the merger would still have created an effective monopoly on 28 of the 46 routes where Ryanair and Aer Lingus are currently in competition. He also dismissed the suggestion that FlyBe would be able to fill the gap left by Aer Lingus, commenting that the Commission did not think FlyBe would have been able to "compete on a lasting basis."

He concluded that "remedying problems of such magnitude would have required a countervailing force capable to be a strong and viable competitor to Ryanair - precisely the kind of competitor that Aer Lingus is today."

Ryanair spokesman Robin Kiely added that the commission decision left Aer Lingus as "a small, isolated airline and leaves the two Irish airlines at the mercy of the government-owned Dublin Airport monopoly, which continues to increase passenger charges, deliver third-rate services and oversee traffic declines."

The decision is the second time that the commission has used the EU merger directive to prevent the takeover, having originally thrown out a bid by Ryanair in 2007. Ryanair then dropped a second takeover bid in 2009.

Meanwhile, the EU executive has blocked an airline merger having also prevented a takeover attempt by Aegean of Olympic airlines, Greece's two largest carriers, in January 2011.

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