Ryanair chief executive Michael O'Leary has again urged Aer Lingus shareholders to accept the €1.4 billion takeover offer for the former State airline, saying that on its own the company has little chance of increasing shareholder value.

In a letter to all Aer Lingus shareholders yesterday, Mr O'Leary said Ryanair "remains convinced that its offer of €2.80 per Aer Lingus share is a generous price". Shareholders have until 1pm on December 22nd to accept the offer. Mr O'Leary criticised Aer Lingus's response to its offer document, saying it "completely" failed to address the significant issues that Ryanair has raised and about which it believes Aer Lingus shareholders should be gravely concerned.

These include the group's "dismal" financial performance in the first half of this year, its declining load factors and failure to provide any details of how it intends to reduce costs.

The Takeover Panel last month ruled that Aer Lingus must reveal details of its cost-reduction plan after mentioning it in its response document. Aer Lingus proceeded to issue a circular, but it contained little detail and simply outlined 12 areas where the group would look to increase cost efficiency.

Ryanair has outlined specific things it would do to lower costs at Aer Lingus if the offer were to succeed, including compulsory redundancies.

In the letter, Mr O'Leary says that without Ryanair's offer he believes Aer Lingus will be unable to cut its costs as it will remain "a small, regional airline with limited bargaining power and a minnow in comparison to the global mega carriers it competes with". Earlier this week he said Aer Lingus's best future prospects were as part of an enlarged Irish airline group.

The letter also points out that Aer Lingus's share price has continued to trade below Ryanair's €2.80 offer price and describes this as evidence that the market has little confidence in Aer Lingus management delivering a better alternative to shareholders. Immediately following the October 5th bid Aer Lingus shares rose above the offer price, though recently the stock has been trading around the low €2.70 level. Yesterday the shares closed unchanged at €2.75.

At an extraordinary meeting earlier this week where Ryanair shareholders approved the takeover offer, Mr O'Leary admitted the bid was "highly unlikely" to succeed. Shareholders representing about 40 per cent of Aer Lingus's total stock have already expressed opposition. Whatever the outcome, Ryanair has said it intends to stay on the Aer Lingus share register. The budget airline has spent €342 million becoming Aer Lingus's second-biggest shareholder with a 25.2 per cent stake, although Mr O'Leary earlier this week said the company hadn't yet decided whether it would raise its holding.

The European Commission is due to rule on the proposed takeover on Wednesday, a decision Mr O'Leary believes will determine the way several Aer Lingus shareholders decide to vote.