In what really should surprise no-one, the latest bid for Aer Lingus by Ryanair is be investigated by the European Commission.
The current bid from Ryanair values Aer Lingus at €694m.
The EC said that initial findings of the take over would “indicates potential competition concerns”, additionally stating:
“On a large number of European routes, mainly out of Ireland, the two airlines are each other’s closest competitors and barriers to entry appear to be high,”
“Many of these routes are currently only served by the two airlines.
“The takeover could therefore lead to the elimination of actual and potential competition on a large number of these routes”
The 2006 attempt by Ryanair to take over Aer Lingus blocked by the European Commission on the grounds if the take over went ahead, the combined entity would have over 80% of slots at Dublin Airport, whilst the 2nd bid for in 2009 ended in rejection from shareholders
Currently, Aer Lingus has a mixed ownership, with 29.4% owned by Ryanair, 25.6% by the Irish Government, Etihad owning 3%, with the rest listed on stock markets.
Ryanair’s hope is this time they can convince other airlines to attack on routes that both airlines operate to create competition. Considering Dublin Airport is a fortress hub almost where the major competition is between Aer Lingus and Ryanair – this has very little chance of working.
Meanwhile, Aer Lingus has said:
“Aer Lingus is a much stronger airline today than it was at the time of the previous Ryanair offers and is Ryanair’s only significant competitor on the vast majority of Irish air routes,”
“The number of routes into and out of Ireland on which Aer Lingus and Ryanair compete has sharply increased since 2007.”
The European Commission said it would decide by 14 January 2013 whether it approved of the deal or not. Expect a lot of lobbying from both sides until that date hits…