herald

Saturday 1 November 2014

Ryanair pledges to land Aer Lingus in new takeover deal

RYANAIR is refusing to backdown in its efforts to take over Aer Lingus.

The company has submitted a ''radical and unprecedented'' proposal to the EU.

Bosses say they believe it has addressed any questions that the EU has in relation to the €694m takeover bid.

And the airline separately reported a significant boost in profits to over €18m due to a pre-Christmas boost.

In 2007, the European Commission first blocked a bid from Ryanair saying it would create a monopoly on Irish flights.

But in a statement this morning, Ryanair has said that it has come up with a remedies package which would involve two up-front buyers each basing aircraft in Ireland to takeover existing route networks.

This would serve to operate a substantial part of Aer Lingus' existing route network and short-haul business.

"Ryanair has submitted a radical and unprecedented remedies package to the EU in support of its offer for Aer Lingus," CEO Michael O'Leary said.

"We believe these remedies address every current Ryanair/ Aer Lingus crossover route and all other competition issues raised by the commission in its Statement of Objections.

"The remedies involve two upfront buyers each basing aircraft in Ireland to take over and operate a substantial part of Aer Lingus' existing route network and short-haul business."

The move comes on the back of the announcement by FlyBe last week that they were in talks with Ryanair about the possible transfer of a number of aircraft and operating routes.

Ryanair's chief financial officer, Howard Millar, said that although the company could not provide details of the proposal, it was the first time it had been done with multiple upfront buyers.

Approval

"This has evolved over the last number of months," he said.

"The EU Commission have raised concerns over a number of routes where there is crossover and we have, we believe, addressed all of their concerns and we look forward to their approval in early March.

"We think it will be good news for Aer Lingus," he added.

In a separate announcement, Ryanair reported bullish third-quarter pre-tax profits of €18.1m -- a massive 21pc increase on the same time last year.

Ryanair said that profits were ahead of expectations due to strong pre-Christmas bookings at higher yields. The positive return came despite an €81m increase in fuel costs.

Revenues increased by 15pc to €969m and traffic grew by 3pc to 17.3m passengers.

"We saw strong demand out of the UK, out of Germany and out of Scandanavia and that has gone straight to our bottom line," chief operating officer Michael Cawley said.

"We are still struggling to understand it, to be honest."

The low-cost carrier said that it looked forward to completing the offer for Aer Lingus subject to receiving approval from the EU competition authorities in early March.

Traffic in the fourth quarter will drop by approximately 3pc less than last year, the company has predicted, due to the airline grounding up to 80 planes.

It said this will limited the impact of high oil prices, high airport fees at Dublin and Stansted, and seasonally weaker fourth quarter demand.

clairemurphy@herald.ie

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