- By Region
Aer Lingus would add jobs rather than shed them after a takeover by Ryanair, though workers’ terms of employment would change, according to the low-cost carrier’s detailed offer document.
Ryanair said its plan to raise annual passenger numbers at the Irish flag-carrier from 9.5m to 14m would necessitate hiring more pilots, cabin crew and engineers. It aims to achieve that growth by reducing ticket prices, while maintaining margins by boosting “the productivity of [Aer Lingus] staff” to reduce unit costs.
The plans were posted to Aer Lingus shareholders on Tuesday, giving the smaller airline’s board until the end of the month to reply under Irish takeover law. Aer Lingus made no comment on Tuesday but last month said that the €694m bid undervalued the group and urged shareholders to take no action.
The €1.30 per share offer – a nearly 50 per cent premium on the average share price over the past six months but a steep discount to when the company made its debut on the market in 2006 – is Ryanair’s third attempt in six years to buy its national rival.
The European Commission rejected the first sally on competition concerns and could prove a hurdle again. “What it all boils down to is, ‘Are they going to get clearance?’,” said Gerald Khoo, an analyst with Espirito Santo.
Ryanair said it would request clearance from the Commission “in the early course”.
In the meantime, the company is wrangling with the UK’s Competition Commission over whether the regulator should continue its investigation into the influence Ryanair wields through its 29 per cent stake in Aer Lingus.
The Competition Appeal Tribunal will hear the case next Friday and is expected to rule by the end of the year, whereas the European regulator’s decision would probably come in the first half of next year. “We will be carrying on with the investigation as best we can pending the CAT’s judgment,” said the Competition Commission.
Mr Khoo said that opposing rulings from the two regulators would create an absurd scenario: “If they [the European Commission] say you can have 100 per cent of the shares, it’s perverse for the UK to come out and say no to having 29 per cent.”
Ryanair argues that market conditions have changed significantly since 2006, including the creation of new capacity at Dublin Airport and consolidation across the sector.
The groups would operate separately under one holding company, according to the plans, with Ryanair continuing to serve budget customers on point-to-point flights, next to Aer Lingus’s “high frequency, mid-frills short haul services to primary airports and its transatlantic operations”.