Ryanair new bid for Aer Lingus

http://www.reuters.com/article/2012/06/19/us-ryanair-aer-lingus-idUSBRE85I19620120619

Budget airline Ryanair (RYA.I) said it planned to make a 694 million euro ($880 million) cash bid for Aer Lingus (AERL.I) in a fresh attempt to gain control of its Irish rival.

Ryanair said on Tuesday after the market close that it would offer 1.30 euros per share for Aer Lingus, in which it already owns a 29.8 percent stake.

First comments :

http://www.rte.ie/news/2012/0619/ryanair-makes-all-cash-offer-for-aer-lingus.html

http://www.bbc.co.uk/news/business-18511024

The Irish Government still holds a 25% stake in the airline, at this time i find it unlikely that RYR proposals will be accepted(IMO).

Government Worries
Would the consolidation of the two airlines result in reduced competition, increased fares and less choice?
A potential hike in fares in particular would be bad for the country's economic recovery and efforts to boost exports.

Ryanair or Etihad.
To be continued..

First reactions in Ireland :

http://www.independent.ie/business/irish/competition-issues-overshadow-ryanairs-latest-bid-for-aer-lingus-3144758.html

Today the board of Aer Lingus said the offer "undervalues" the airline and questioned whether the deal would ever cross the line.
But the Irish government and European competition authorities, two key parties that helped block two earlier bids by Ryanair, refused to say whether they would back the bid.
"Some of the market clearly does not believe Ryanair will be allowed buy it," said Alan Duff, a trader with NCB stockbrokers in Dublin.

Does anybody know what Ryanair will do with Aer Lingus if it would get control of it? Will Aer Lingus keep on existing? Does Ryanair want the slots to the USA? Or would we get a scenario like the Ryanair takeover of Buzz?

Aer Lingus rejects latest Ryanair bid
Aer Lingus has shot down a surprise bid from Ryanair to seize control, saying its offer is too low.
The former state-owned airline said it was unlikely any buy-out could be completed anyway, considering Michael O'Leary's firm is being investigated by the UK Competition Commission over its existing 30% share.

Ryanair's fresh offer would value Aer Lingus at €694m (£560m).

If Ryanair's bid is accepted, its offer of €1.30 per share would result in a €175m (£141m) windfall for the Exchequer.

Ryanair chief Mr O'Leary hopes to boost Aer Lingus' passenger numbers by 4.5m to 14m over the next five years by forming "one strong Irish airline" to compete with major European players.

Ryanair's 'now or never' bid for Aer Lingus

“We are generating so much bl**dy money we don’t know what to do with it.” (MOL)

Trying to flush out Etihad

Ryanair bids to take over Aer Lingus, but service could suffer warns Irish government

Ryanair has attempted to buy struggling Irish airline Aer Lingus for the third time, putting in an offer in the hope of a takeover.

Aer Lingus has urged shareholders to reject the budget airline, saying the offer was too low and questioning Ryanair's ability to complete the sale, particularly when it is being investigated by the UK Competition Commission for the 30 per cent stake it already has in the company.

The decision comes after the Irish Prime Minister voiced concerns about the impact of the bid on passengers.

Enda Kenny questioned the matter of competition and whether a takeover would affect flight prices and access to the country.

http://www.irishtimes.com/newspaper/finance/2012/0621/1224318356954.html

Extracts :

In 2007, the commission decided that a Ryanair takeover of Aer Lingus would create a “monopoly or a dominant position” on 35 routes affecting 14 million passengers and that the remedies offered by Ryanair – including surrendering certain routes to competitors – were not sufficient.
O’Leary will have to be a lot more creative with his remedies this time around if he is to change the commission’s view.
The commission has only once before reversed a decision on a corporate takeover such as this.
This process could run for up to nine months and move straight into a phase two investigation.
Any change of heart by the commission will boil down to the remedies that O’Leary can offer. It will also hinge on whether other airlines will be willing to take up the challenge of operating the routes in Ryanair’s backyard that the airline gives up to secure approval for the takeover.
There is also the small matter of persuading the Aer Lingus board and its shareholders to approve a deal.
This will be a tall order.

http://www.rte.ie/news/2012/0816/ryanair-in-talks-with-ec-over-aer-lingus-takeover.html

Ryanair is holding discussions with the European Commission about pulling Aer Lingus from a series of routes from Dublin if it is permitted to take over the airline.
This would allow a number of major European airlines, including British Airways and Virgin, to operate from routes vacated in the airport.
The proposal is being put to the EU as a means of addressing concerns that a takeover of Aer Lingus would result in Ryanair gaining an excessive market share on Dublin routes.

(reference found on www.luchtzak.be)

http://www.independent.ie/business/irish/ryanairs-oleary-confident-about-latest-aer-lingus-bid-3219181.html

Europe's competition regulator last week launched an in-depth review of Ryanair's latest Aer Lingus bid, signalling the airline may have to make big concessions to ease competition concerns or face fresh failure.
"We are confident that the remedies package will be enough to satisfy competition issues," Ryanair's chief executive Michael O'Leary told a news conference in London.
"There are 46 cross over routes and we will remedy all of them by getting airlines to come to Dublin and take them over," O'Leary added, referring to routes on which both Ryanair and Aer Lingus operate.

Ryanair has said it is confident of winning regulatory clearance for its bid for Aer Lingus after the submission of a “revolutionary” package of remedies to the European Commission to address competition concerns.

It also warned on Friday that Aer Lingus would inevitably be broken up if Ryanair’s €1.30 per share bid for the Irish flag carrier was blocked by Brussels.

“If the commission turns down this remedies package, then I think we would have to seriously consider exiting our investment in Aer Lingus, which without question would result in Aer Lingus being broken up,” said Michael O’Leary, Ryanair chief executive, at the company’s annual meeting in Dublin.

Mr O’Leary said Ryanair had received bids for its 29.9 per cent stake in Aer Lingus from financial buyers. He would not give any further details of these approaches, except that some of them had been made within the last three months.

Mr O’Leary said Ryanair had submitted a draft remedies package to the commission, which involved getting other airlines to commit to take over 35 routes to Europe where the proposed takeover would result in a monopoly situation. Talks between Ryanair, Brussels and other airlines would continue until the end of October and he was hopeful of a decision on the bid before Christmas, he said.

“There is a compelling airline timing issue involved. If we could get approval before Christmas then it would enable the other airlines to come and take up the other routes in time for summer 2013,” he said.

http://www.reuters.com/article/2012/10/04/ryanair-aerlingus-idUSL6E8L4I7L20121004
(ref. found on luchtzak.com)

If the takeover succeeds, Ryanair would maintain Aer Lingus' branding and position it midway between easyJet and Ryanair, cutting the average fare to 65 euros from 85 euros at present, compared with 45 euros at Ryanair, McNamara said.
"Instead of having a Belfast base, and a Gatwick base, they should have a Brussels base" to serve non-Irish routes, he said of Aer Lingus.
Aer Lingus, which only operates from Ireland and Northern Ireland, could then compete with Brussels Airlines out of Brussels National airport and possibly with easyJet in destinations like Amsterdam.

http://www.independent.ie/business/irish/ryanair-bullish-over-aer-lingus-buyout-3294575.html

Ryanair says it remains confident that the European Commission will approve its €694m acquisition of Aer Lingus despite Brussels having issued a so-called 'statement of objections' to the carrier.
The statement of objections state that the remedies Ryanair proposed to the EU's competition commission to secure approval for the takeover aren't yet sufficient to persuade it to approve a possible takeover. Ryanair confirmed yesterday that it received the statement on Tuesday.
It described the statement of objections received from the EU as a "standard procedural step" in intensive phase two EU merger reviews.
"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 said.

http://online.wsj.com/article/SB10001424127887323539804578259883162392570.html?mod=googlenews_wsj

European Union regulators Wednesday extended the deadline of their review of Ryanair's bid to acquire rival Irish airline Aer Lingus to March 6.

The decision comes after Ryanair, Europe's largest discount carrier by passenger numbers, submitted a fresh package of concessions to address the EU's antitrust concerns. The package includes a nonbinding agreement to sell some Aer Lingus assets to regional carrier Flybe and British Airways.

Under the new package of concessions, Flybe would take over 43 of the Irish carrier's routes, while British Airways would operate fewer routes than originally foreseen but would hold on to the three lucrative London Heathrow to Dublin routes, a person familiar with the situation said.

"It seems unlikely that Ryanair can improve significantly on this package," said Bruce Kilpatrick, a competition partner at law firm Addleshaw Goddard in London.

"The question for the European Commission will be how credible Flybe is as a rival," Mr. Kilpatrick added. "It has a similar kind of business model and competitive pricing," he added.

The commission is currently market-testing the new measures Ryanair has presented as antitrust remedies. The commission typically garners reactions from third parties of proposed concessions as part of its decision-making process.

http://www.herald.ie/breaking-news/national-news/flybe-aids-ryanairs-aer-lingus-bid-3378037.html

Extract :

Flybe has boosted Ryanair's hopes of a takeover of Aer Lingus by agreeing a plan to fly 43 of the Irish carrier's short-haul routes.
Under the agreement, Flybe will receive a minimum of nine Airbus A320 aircraft and a cash injection of 100 million euro from Ryanair.
The newly created Flybe Ireland will operate from bases in Dublin and Cork, with many of the 34 European destinations served by the 43 routes already used by Flybe's UK business.
Ryanair will give Flybe the right to use the Aer Lingus brand for three years and will develop a business plan that should provide 20 million euro in pre-tax profits in the 12 months following the transfer.

The deal comes a month before the European Commission is due to give a decision on Ryanair's bid for Aer Lingus. Should the budget carrier succeed with its takeover, Flybe Ireland is expected to commence operations in time for the winter season.

Flybe are/have been in a financial struggle(fuel costs, passenger duty tax rises) the new proposal should/could keep them in the air for a further 3 years.

Does anyone know what Ryanair's plans are with the transatlantic routes of Aer Lingus? If I am not wrong, Aer Lingus operates flights from Shannon and Dublin to New York, Boston, Chicago and Orlando.

Aer Lingus continues to reject Ryanair

Aer Lingus on Wednesday denounced Ryanair’s proposed takeover of the Irish flag carrier, as it reported a 41 per cent rise in underlying operating profit in 2012 and raised its dividend.

With the European Commission reviewing Ryanair’s third attempt to secure control of Aer Lingus, Christoph Mueller, the flag carrier’s chief executive, insisted that combining Ireland’s two main airlines would be “bad for consumers”.

His statement came as Flybe, the UK regional airline, disclosed that a planned new subsidiary should generate a €20m pre-tax profit in its first year of operation under an agreement with Ryanair that is intended to help secure its takeover of Aer Lingus.

Ryanairflyer wrote:
Christoph Mueller, the flag carrier’s chief executive, insisted that combining Ireland’s two main airlines would be “bad for consumers”.

Christof Mueller now caring for the consumer's interest ! Wonders will never cease...
What he really cares for, is his job, which he would probably lose in the event of Ryanair taking over.

http://www.ryanair.com/en/news/ryanair-to-appeal-any-eu-prohibition

Ryanair was notified this morning (12 Feb) at a State of Play meeting with the EU Commission, that the EU Commission intends to prohibit Ryanair’s offer for Aer Lingus, despite the fact that Ryanair has met every competition concern raised in the EU’s Statement of Objections and during the review process, including providing the EU – at its request – with irrevocable commitments from not one, but two, upfront buyers to eliminate all competitive overlaps between Ryanair and Aer Lingus. IAG has committed that they would take over divestments of Ryanair’s and Aer Lingus’ entire London-Gatwick operations, and Flybe has committed to take over 43 Aer Lingus UK and European routes.
Given that the EU Commission recently approved IAG’s acquisition of BMI at London-Heathrow on the basis of three year commitments, the EU’s claim that it could not be satisfied of IAG’s and Flybe’s commitments to these Irish routes after three years is another example of the EU holding Ryanair to a much higher standard than any other EU airline. Ryanair’s remedies package is unprecedented. For the first time in EU airline history, Ryanair delivered not one, but two, substantial upfront EU airline buyers who have agreed to come to Ireland to compete against a combined Ryanair/Aer Lingus.
Ryanair has today instructed its lawyers to appeal any prohibition decision to the European Courts.

http://www.independent.ie/business/world/aer-lingus-small-change-oleary-29084953.html

21 February 2013

Ryanair boss Michael O'Leary said he isn't preoccupied with pursuing Aer Lingus, even though he's planning to appeal an impending European Union ruling blocking a takeover.

"I'm not obsessed with Aer Lingus," Mr O'Leary said yesterday in an interview in Cologne, Germany. "Aer Lingus is small change." Ryanair heard from the EU Commission this month that its latest bid for Aer Lingus would be rejected on anti-trust grounds.

http://www.reuters.com/article/2013/02/26/uk-aerlingus-ryanair-idUSLNE91P02520130226


The European Commission looks certain to end Ryanair's seven-year pursuit of Aer Lingus, but Brussels can't stop the low-cost carrier from using its stake to keep its rival in limbo for years.

A veto, which would be the first time it has twice rejected a proposed takeover, could force Ryanair chief Michael O'Leary to decide whether to finally set its smaller rival free by selling its 30 percent stake.

But if O'Leary follows through on a threat to attempt to become the first company in a decade to overturn an EU anti-monopoly decision, the process could tie up the stake for years.

It would also likely scare off other strategic investors and stymie the Irish government's efforts to offload its own 25 percent stake - part of a package of privatisations required by its 85 billion euro EU-IMF bailout.

"The government and Aer Lingus will simply have to wait and see what Ryanair chooses to do," said analyst David Holohan at brokerage Merrion Capital. "Until the Ryanair process is completed, I think the government will struggle to find a buyer."

I believe there is an announcement due on this today.

Look out in the news.

Yes, the European Commission will announce its decision today on Ryanair's third bid.
It is expected the EC will reject Micheal O'Leary's €694m bid.
Ryanair said earlier this month that its information suggested the EU was planning to block its takeover attempt for the airline, in which it holds a nearly 30% stake.
Question is - Are Ryanair likely to appeal today's decision, if it does not go their way?

Indeed, I believe it is highly likely they will appeal. I know some people have their doubts over the viability of flybe etc but it sounds like with all the concessions and Ryanair practically giving away routes shows their commitment to this deal.


If they do appeal, what sort of timeframe are we looking at? Years? months?