Ryanair delays Aer Lingus proposal

RYANAIR HAS yet to submit any proposed remedies to the European Commission in relation to its €1.30-a-share offer for Aer Lingus.

This is being viewed as a tactical move by Michael O’Leary and Ryanair, in the expectation that the commission will announce on August 29th that it will move to a more detailed phase-two investigation of the offer.

Ryanair had until August 22nd to submit its concessions to the commission.

That would have resulted in the commission extending its original deadline of August 29th by two weeks, to September 12th.

The commission confirmed this week that it would give its view on the matter on August 29th. This indicates that Ryanair did not offer any concessions by the August 22nd deadline.

The airline has decided not to show its hand yet, on the basis that the complexity of the proposed deal will result in the commission moving to a more in-depth phase-two inquiry.

This would allow Ryanair more time to draft its remedies for the commission and also deprives Aer Lingus of an early sight of the concessions that its rival will offer.

Ryanair declined to comment on the matter last night.

Last week, it emerged that Ryanair’s remedies will include offering Aer Lingus’s London Heathrow slots to carriers such as Virgin and BA.

It is also thought to have formulated concessions on a wide range of other routes from Ireland where the two airlines are deemed to have a monopoly currently.

The commission rejected Ryanair’s first offer for Aer Lingus in 2007 via a detailed judgment.

A second offer in 2009 was withdrawn by Ryanair before the commission had time to consider the matter.

Separately, Aer Lingus yesterday reaffirmed to shareholders its recommendation that they should reject Ryanair’s offer for the company.

The board said Aer Lingus was a “strong and profitable airline with a proven business model, a strong balance sheet, and an internationally recognised and valued brand”.

It said the offer represents a discount of 34 per cent to Aer Lingus’s gross cash per share of €1.96.

In addition, Aer Lingus states that the offer is a 12 per cent discount to Aer Lingus’s net asset value per share of €1.48 based on its net asset value at June 30th.

Aer Lingus also reiterated that it had delivered a €130 million turnaround in its operating performance between 2009 and 2011.

The board said its view remains that Ryanair’s offer is not in the interests of shareholders and is likely to be prohibited by the commission.

Aer Lingus’s notice to shareholders was broadly in line with a communication issued on July 31st.

The timing of the latest notice was in line with the Takeover Panel rules on these matters. The panel sets certain deadlines for the parties involved to issue communications during an offer period.