Ryanair renews bid to buy Aer Lingus

Ryanair, headquartered in Dublin, Ireland, and the largest low-cost carrier in Europe, is planning to revive a bid worth €1 billion (£800 million) for Aer Lingus, the flag carrier of Ireland. 

In a statement, Ryanair said: “The worsening economic climate and high fuel costs could force European competition regulators to adopt a more flexible attitude towards mergers.” 

Ryanair, with its biggest operational base at London’s Stansted Airport, operates services across Europe and North Africa. The airline is the third largest airline in Europe in terms of passenger numbers and the world’s largest airline in terms of international passenger numbers.”

Aer Lingus, based at Dublin Airport in Ireland, operates services to Europe, Africa and North America. Aer Lingus is 29.4% owned by Ryanair and 25.4% owned by the Irish government. It is a former member of the Oneworld airline alliance, which it left on March 31, 2007. At present, Aer Lingus has extensive codeshares with members of the Oneworld and SkyTeam alliances. 

In 2007, the European Commission had blocked an attempt by Ryanair to buy Aer Lingus amidst fears that the combined airline would control Ireland’s aviation market.  

The Ryanair statement said: “The company believes that the European Commission will be forced to change its stance on airline mergers in the coming months as more carriers seek survival deals. The European Commission will have to ratify a number of deals in the next 6 to 12 months, including a tie-up between British Airways and American Airlines, and between British Airways and Spain’s Iberia.”

In a press release, Aer Lingus had said a week ago that it had made a loss of €20.2 million in the first half of 2008 and that the loss could go up in 2099. The airline had also said it was making “fundamental changes” to its cost-base after getting into debt. And, the debt could lead to a radical overhaul in staffing, the release had warned. 

Dermot Mannion, chief executive of Aer Lingus, had remarked in the press release: “The competitive landscape has not changed one bit since Ryanair made its first approach. The European Commission rejected Ryanair’s bid because of the market concentration Ryanair and Aer Lingus would have in Ireland. What happens elsewhere in Europe will not change that dominance.”

Ryanair had, on it s part, said that its rival Aer Lingus should scrap fuel surcharges because it is losing customers on long-haul traffic. 

Ryanair also criticised the management of Aer Lingus for having increased its directors’ fees from €17,500 a year to €45,000 a year between 2007 and 2008. 

Recently, Ryanair had said that it could also make a small loss this year for the first time since 1989 as it cuts fares to grab business from struggling rival carriers.

Aer Lingus had hiked fuel surcharges 6 times since October 2006, even as the long-haul load factor dropped from 77% to 67% in the first half of 2008.