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Dublin: 8 °C Wednesday 22 May, 2013

Ryanair’s shareholding in Aer Lingus on course to be investigated

Ryanair has already said it plans to appeal the ruling at the Supreme Court.

Image: Niall Carson/PA Wire

RYANAIR’S MINORITY SHAREHOLDING in Aer Lingus is looking increasingly likely to be investigated under merger control legislation in the UK.

The no-frills airline immediately said that it will appeal the ruling to the Supreme Court. The ruling was handed down by an appeal court in the UK today and means that the Office of Fair Trading can now proceed with its investigation which began over two years ago.

Ryanair currently owns almost 30 per cent of Aer Lingus.

Aer Lingus CEO Christoph Mueller said he supported the judgement and that Ryanair’s shareholding is “contrary to the interests of consumers and the majority of our shareholders”:

It is unacceptable that our principal competitor has been allowed to remain as a significant shareholder on our share register even though the European Commission blocked their hostile takeover almost five years ago.

Mueller said that the situation was intolerable and cannot be allowed to continue. “Today’s judgment confirms that the OFT has the jurisdiction to investigate the anti-competitive effects of Ryanair’s minority shareholding in Aer Lingus,” said the Aer Lingus CEO.

“The OFT can now proceed swiftly to complete its investigation into Ryanair’s shareholding which is contrary to the interests of consumers and the majority of our shareholders”.

Ryanair said it had instructed its lawyers to file a UK Supreme Court Appeal of the decision. The airline had said that the OFT was out of time to investigate Ryanair’s 29 per cent stake in Aer Lingus which has been in place for six years.

In a statement, Ryanair said that it had been stopped from a takeover of Aer Lingus in June 2007 by the EU Commission which had confirmed that Ryanair could not be forced to sell its 29 per cent minority stake since Ryanair did not have de facto or de jure control of Aer Lingus

The Office of Fair Trading had previously started an investigation into Ryanair’s minority shareholding in September 2010, a decision which was upheld by the Competition Appeal Tribunal in July 2011.

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Comments (23 Comments)

  • It’s a conflict of interest for one airline to have a stake in another airline. I am sure O’Learys stake in Aer Lingus is not out of the goodness in his heart. Most countries have their own national airline. I would dislike to see Ireland lose Aer Lingus.

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  • I’m a bit confused… Why have the UK courts taken this action?

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  • I wonder if Aer Lingus were left to their own devices over the past decade would they still exist? the Ryanair competition pressure has ensured a leaner more competitive and viable airline that thankfully retains much of their corporate and staff positive attitude to customers. I too ask why are the UK taking issue with Ryanairs share in the Irish national airline, is it a UK tactic to keep the Ryanair executives and resources tied up in UK courts and therefore allow their own guys to gain advantage?

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  • I’d hate to see Ryan Air get any say in Aer lingus, I enjoy being treated like a human with courtesy and not not like cattle being herded to the gate and milked of money if I want service that should be standard not an extra.

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    • Ryanair are profitable. No matter what they think themselves, Aer Lingus are more budget than luxury. BA they are not. O’Leary may be intensely annoying, but he’s been effective at building up a successful airline. Ireland’s a small country with many non-Irish airline flying in daily. Can Ireland really support two airlines. I’ve no problem letting O’Leary maintain and increase his stake in Aer Lingus if it leads to more profits and more revenue for the state. Let him at it.

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    • As a customer I find Aer lingus as completive if not cheaper. Ryan air is profitable because it promises cheap flights but by the time you add booking fees, luggage (extra weight) etc, He’s making a fortune off the passengers. I prefer to have a choice with whom I fly with, an air line that treats you with courtesy or a cowboy who is out to milk an obnoxious profit out of you. €503,000,000 profit is what he made this year. Companies need to be financially viable but should this be at the cost of basic service/ courtesy to customers.

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    • @ Mick – I agree with you in that Ryanair have cut customer service to the bone. The old analogy of running an airplane like a bus service. To be honest though, from where I live, the only way I can fly to Dublin these days is with Aer Lingus and, while sometime’s they’re better than Ryanair, most of the time it’s a very similar level of service, and sometimes it has been unacceptable – delays when flying with 2 small kids with no apology or explanation, not enough baggage space on board, hidden charges, etc. I’ll take worse service with a reduced price, but I really don’t think Aer Lingus is a different level of luxury or a different pricing level overall. They’re offering a similar service at relatively similar prices overall, it’s just Ryanair seem to be better at making a profit. There’s a great comment below that wonders if Aer Lingus would stay in business if and when they are a fully private company. I don’t believe Ireland needs a “national” airline, and I don’t believe that 2 Irish airlines can effectively thrive in the same market, so let the best company win.

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    • There’s over 20 million passengers flying in and out of Ireland every year. That’s more than enough to support two airlines.

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    • Not all of those 20 million are flying on the two Irish Airlines ( taking the minis like AE out of the equation. I’ve a pile of work to do, but I’m interested to find out what percentage of the 20mill are Ryanair and AL passengers. Will have a search when I get a bit of time…

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    • Well he has a say and has for the past 6 years and Air Lingus is not the national airline any more it is owned by shareholders and M. O’Leary is a shareholder

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    • @ Mick are you serious with , “milk an obnoxious profit out of you?” ya may do your numbers again, Ryanair made about ?6 profit per passenger last year and about ?4 the year before, whatever else you think about them. you can’t say that’s not bloody fair? if you think its not fair you’ll get some fright when you find out how much profit the last shop you visited made out of you…

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  • Name one business monopoly that hasn’t abused it’s position.

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  • Gizzie 22/05/12 #

    Just to clear a few things up from the comments:

    EI flew just under 10m passengers last year. The majority of Ryanair’s business is not in Ireland. In fact, they have decreased the amount of flights in Ireland due to the DAA’s high charges. (40% increase this year if I remember right)

    The UK are investigating it because Ireland doesn’t have a law saying that a competitor can’t own a significant portion of your business, but every other European country does & since Aer Lingus does a lot of business in the UK, it can ask the OFT to investigate it.

    And finally, the government may own about 30% of Aer Lingus, but they don’t have a say in the running of the airline. If Aer Lingus decided that they were going to stop flying to London, the government may play the major shareholder card, but that won’t happen. So Aer Lingus have effectively been a private company since they floated & have been profitable for the past 3 years. They are much much smaller than Ryanair so will never have their profits.

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  • Having had to fly a lot with work I can say Aer Lingus are selectively polite. Treated me very nice when in a suit but quite badly when not. Very snobby staff. Ryanair are blunt but treat people equally.
    As some flights used to be IR£500+ to the uk and now rarely higher than €100 I thank Ryanair.

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  • That 20 Million is for all Airline travellers in and not of Ireland, on all airlines servicing Irish airports. What the percentage for only AL and Ryanair travellers?

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