Ryanair defeated a resolution at Aer Lingus's annual general meeting yesterday that could have had the effect of diluting its 25.2 per cent shareholding in its rival.
The resolution would have given Aer Lingus the power to raise money by issuing new shares without having to offer them to existing investors in the airline.
This could have had the effect of increasing Aer Lingus's share capital and of reducing Ryanair's percentage stake in its rival.
As the resolution required 75 per cent approval, Ryanair was able to use its holding to block the motion.
Of the 420 million votes cast, 133.5 million or 31.8 per cent were cast against the resolution. Michael O'Leary exercised his vote by post and did not attend the agm, Aer Lingus's first as a public company. Ryanair declined to comment on its move.
Aer Lingus chief executive Dermot Mannion said the airline had no plans for a rights issue.
The motion, he added, was purely to give the company flexibility in terms of its capital raising options. "It's not significant, it's merely a technical issue," he said.
Ryanair's proposed takeover of Aer Lingus was blocked by the European Commission in a judgment published last week. The commission, however, said Ryanair was not required to sell its shareholding in Aer Lingus.
Mr Mannion declined to comment on whether Ryanair should be required to sell its shares in Aer Lingus.
"It's a matter for the national competition authorities," he said. "We'll have to see where that process goes."
He did say, however, that investors would like to see more liquidity in the stock. This is a reference to the fact that 65 per cent of Aer Lingus's shares are owned by the Government, staff and Ryanair.
Mr Mannion confirmed that Aer Lingus had met with representatives of Ryanair a couple of months ago as part of an investor roadshow.
But he said there had been no direct contact with Mr O'Leary.
Earlier, John Sharman, chairman of Aer Lingus, told shareholders that he had "great respect for Michael O'Leary and what he has done with his business". He added: "We'll give him a run for his money." Shareholders gave the green light to a long-term incentive plan to reward executives and senior managers with share options.
Mr Sharman said about 30 people would benefit from the plan and the details of the awards would be released shortly.
One shareholder in the small attendance asked Mr Sharman if the company would consider a name change to better reflect its Irishness.
The shareholder said the word "lingus", which means fleet, meant nothing to most people, especially in overseas markets. He suggested "Air Ireland" as a possible alternative.
Mr Sharman replied that the shamrock was a "pretty famous symbol" and that the "Irishness of the airline will not be compromised".
