Ryanair Says It Will Appeal Order to Reduce Aer Lingus Stake

Today, the United Kingdom Competition Commission (UKCC) said that Ryanair Holdings (NASDAQ: RYAAY  ) will be required to reduce its stake in Irish airline Aer Lingus from the current 29.8% position down to 5%. The decision from the UKCC also says that Ryanair cannot "seek or accept" board representation or acquire any more shares of Aer Lingus.

Ryanair, which has failed in attempts to take over Aer Lingus since Ireland's government privatized the state-owned airline in 2006, says it will appeal the UKCC report on its share of Aer Lingus. A Ryanair press release called the ruling "bizarre and manifestly unsound."

Simon Polito, the competition commission's deputy chairman and chairman of the Ryanair/Aer Lingus Inquiry Group said in a statement that, "After careful consideration we confirmed our provisional view that Ryanair's minority shareholding has resulted, or may be expected to result, in a substantial lessening of competition between the airlines." 

In 2006, Ryanair acquired a stake of Aer Lingus and then tried a bid for the remaining shares later that year, but the European Commission decided against the bid in 2007. Again in 2012, Ryanair went for the remaining shares of Aer Lingus, but it was again prohibited by the European Commission earlier this year. 

In response to the commission's decision today, Ryanair put out its own statement saying it will appeal the commission's final report. The company's director and CEO, Michael O'Leary, said in a press release that, "This prejudicial approach to an Irish airline is very disturbing, coming from an English government body that regards itself a model competition authority."

He went on to say that Ryanair is one of the United Kingdom's largest airlines and that Aer Lingus has only a small presence in the U.K. and accounts for less than 1% of U.K. air traffic. The company said that the UKCC's opinion that Ryanair's shareholding has led to a lessening of competition between the airline routes between Great Britain and Ireland is a "baseless claim."

Ryanair is Aer Lingus' largest shareholder, while the government has retained a 25% stake. The government says it's willing to sell its shares, but not to Ryanair.

-- Material from The Associated Press was used in this report.

 


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