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Ryanair sees Aer Lingus takeover boosted by Europe consolidation moves

The recent rush of airline merger and acquisition activity in the region is prompting Ryanair to step up its campaign to capture rival Irish carrier Aer Lingus. "We think the likelihood of Ryanair taking over Aer Lingus is now significantly increased considering what is going on across Europe," says Ryanair deputy chief executive and chief financial officer Howard Millar.

The carrier launched an audacious takeover bid for Aer Lingus in late 2006, initially buying some 16% of the airline shortly after the flag carrier was privatised by the Irish Government. The bid failed after Ryanair struggled to secure Aer Lingus shareholder support for the move. It was also then blocked by the European Commission on competition grounds - a decision Ryanair has always fiercely contested.

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"With the situation in Italy of Air One and Alitalia and looking at the series of mergers going on right across Europe we don't see why Ryanair/Aer Lingus can't go ahead," says Millar. It should be revisited by the authorities now that the "European Union is actively encouraging" consolidation, he says. Ryanair, which has built up to a 29.82% stake in Aer Lingus to be the single largest shareholder, would restructure the its rival to lower its cost base but keep the brand separate and the network "pretty much in the same shape", he says.

Ryanair has criticised Aer ­Lingus management for ordering ­Airbus aircraft at the high point of the market and for its "rapacious fuel surcharge on long-haul routes". "We said you are going to get screwed by Airbus and they went ahead and did it any way," says Millar.

Ryanair's own long-haul ambitions are on hold because fuel is too expensive as is the price of aircraft, says Millar. Any new venture would also not be done by Ryanair itself but in a new company to operate the longer-haul routes. If Aer Lingus is taken over it could be the vehicle for this move, says Millar.

Watch our video interview with Aer Lingus chief executive Dermot Mannion here:
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