Ryanair has bought another 4 per cent of Aer Lingus, bringing its stake in the former State airline to more than 29.4 per cent and overtaking the Government (which holds 25 per cent) as its largest shareholder.

In a statement to the stock exchange released after the market had closed yesterday, Ryanair confirmed it had acquired the Aer Lingus shares at a price of no more than €2.45 each, lowering the average cost of the shares it has bought.

While the announcement had been expected following heavy trading in Aer Lingus shares last week, the total stake held is more than was anticipated.

Trade in Aer Lingus was busy again yesterday, with more than 6.5 million shares changing hands. Market sources said Ryanair was the likely source of at least some of the buying.

It is unclear though whether yesterday's purchases were included in the 29.4 per cent stake revealed yesterday. If they were not included, it is possible that Ryanair now holds the maximum permitted 29.9 per cent stake in Aer Lingus.

Under Irish Takeover Panel rules anybody reaching this level is required to make a bid for the company, but in June the European Commission blocked Ryanair taking over Aer Lingus, citing competition concerns, in effect making the airline exempt from this rule.

Given the fact that Ryanair cannot make a bid for Aer Lingus, it is unclear what chief executive Michael O'Leary's intentions are.

In a statement yesterday a Ryanair spokesman attributed the decision to increase the stake to Aer Lingus's plan to move routes between Shannon and London Heathrow to Belfast.

Ryanair has been a vocal critic of Aer Lingus's plan and last week requested that an extraordinary general meeting of Aer Lingus shareholders be convened to try and have the decision reversed.

In the statement the spokesman said that if Ryanair abstains from voting at the meeting, then the Government - with its 25.4 per cent stake - and the Employee Share Ownership Trust (ESOT) - with 14.4 per cent - will have a clear majority to vote to save the routes.

He also said that should the Government decide to abstain, then the ESOT and other Aer Lingus employees should have sufficient votes between them to comprise a majority of the remaining 45 per cent of shareholders.

Aer Lingus shares yesterday rose 1.2 per cent, or 3 cent, to end the day at €2.45, while Ryanair closed up 1.9 per cent, or 9 cent, to close at €5.02.