Aer Lingus has formally rejected the proposed all-cash acquisition of the carrier by Irish budget airline Ryanair.

The board of Aer Lingus says the offer "significantly undervalues" the flag-carrier.

Ryanair's offer values Aer Lingus shares at €1.40 ($1.77), half the figure it offered in an unsuccessful takeover attempt two years ago.

Aer Lingus points out that the European Commission barred the previous potential merger, which lapsed in December 2006 after Ryanair's offer failed to attract many acceptances.

"Ryanair is now appealing the European Commission prohibition," says the Aer Lingus board in a statement. "Consequently this new, lower offer is not capable of completion."

It says Aer Lingus is a "strong" business with "significant" cash reserves and a "robust" long-term future, adding: "The board rejects this new offer and Aer Lingus shareholders are strongly advised to take no action in relation to the offer."

Source: Air Transport Intelligence news