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IRISH AIRLINE RYANAIR has made a formal bid of €694 million for rival firm Aer Lingus.
Ryanair signposted the move last month but made the pursuit official today by posting a document in respect of the cash offer to its website and the Irish Stock Exchange.
The company also posted the offer document, outlining terms of €1.30 per share in cash for the entire issued capital of the Aer Lingus group, to the airline’s shareholders today.
The offer, which values Aer Lingus at €694 million, will remain open until 3pm on 13 September this year.
In a letter to shareholders, Ryanair CEO Michael O’Leary said that the valuation is 38.3 per cent higher than Aer Lingus’s market capitalisation as of 19 June 2012.
He said the cash offer represents “excellent value” for Aer Lingus shareholders and stakeholders, including passengers and employees. He also noted that if the offer is accepted by the Government, the State would receive €174 million in cash from the sale.
However, O’Leary pointed out that the cash offer does not require acceptance by the Government to be successful.
In his attempts to convince shareholders to sell, O’Leary said that Aer Lingus has “failed to deliver value” in its six years as a public company. He believes that significant changes in the air transport market in Europe will allow for the consolidation.
“The long term future of Aer Lingus, its brand and its growth prospects can best be secured within one strong Irish airline group, led by Ryanair, under which fares and unit costs can be reduced and its recent traffic decline can be reversed,” wrote O’Leary.
If its bid is successful, Ryanair intends to improve Aer Lingus services at airports where Ryanair does not wish to operate. Both companies would be run as separate brands.
Ryanair already owns 29.82 per cent of the issued share capital of Aer Lingus but has failed in two other attempts to purchase a majority holding. It made its first unsuccessful bid for its rival back in 2006 but was blocked by EU competition authorities. O’Leary said that recent mergers by other airlines should clear the way for his firm this year.
His company is also jumping in at a time when the State has signalled its intention – and made a commitment to the Troika – to sell its remaining 25 per cent stake.
The Irish government has said that it is open to selling ‘at an appropriate time’ but only when market conditions are favourable and an acceptable price is agreed. It also wants to ensure that selling would not deter any other potential investors.
Transport Minister Leo Varadkar has previously said that the Government would not sell off its stake for less than €1 per share.
Addressing the potential position of Aer Lingus staff, Ryanair said it is the intention to increase employment number of pilots, cabin crew and engineers at the airline. However, revised conditions of employment may need to be negotiated, it added.
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What a disaster it would be if Michael O’Leary had ownership of the two biggest airlines flying out of this country. Kiss goodbye to competition
aer lingus is not a big airline!
Aer Lingus has over 40 aircraft, that makes it a pretty major player in Europe! Not the biggest but still big!
And anyways, it’s his reference to major in Ireland which it is! If Aer Lingus suddenly fell into the Ryanair fold you would find that they would control about 90% of the market and a near monopoly with high fares for all! Yay!
But no fear, I’m sure Brussels won’t allow it!
BMI, was classed as a big airline from heathrow, they had 23 aircraft.
Michael O’Leary has been one of the most successful Irish business people over the last couple of decades. It’s just a shame the country didn’t have someone like him in charge over the years.
There are times where I do question the mans sanity. He often starts off reasonable enough, but the longer he talks the more out there he gets…
It’s the best thing that could happen to Aer Lingus. It’s a state owned asset that has been running at a loss due to inefficient management since it started with overpaid staff and mandatory sick days etc.. Michael O’Leary would change all that and I for one would be delighted if he did
It’s not running at a loss at all! Infact it’s turning a significant profit considering its trading environment AND has billions in the bank not to mention the third highest share of lucrative Heathrow slots!
it certainly is making a profit. its holding its own. it has A billion circa in the bank, not billions. but has A 700million hole in its pension fund. and new planes to pay for to replace its long haul fleet. it cash reserves really don’t count. The Heathrow slots on the other hand now their juicy alright. and its US east coast slots and relationships with united and jet blue.
Exactly. It’s a profit making airline. Why so you think Michael wants it so bad?! Have literally just got off an aer lingus plane. And I’ll be flying with them again. Ryan air? No chance, if they buy it out right then I’ll be making other arrangements to travel.
Awe Shelly, you couldn’t be more wrong, as Ryanair before stated, after itself Aer Lingus is one of the most desirable airlines in Europe to own due to how well it is run especially since its been privatised. And believe me, the sick leave is far from mandatory.
Please don’t let this happen
If Ryanair buy AL I shall move my twenty odd yearly flights to British Airways.
Please do, I like my job there! Lol
Me to Damien, i usually fly Aerlingus or BMI from heathrow to Dublin many times a year, if Ryanair take over Aerlingus i will fly BA everytime seems as they bought BMI.
Aer Lingus provides a far better service than Ryanair, and gives value for the money paid. Unless O’Leary wishes to learn something, he should keep his airline away from the national carrier.
We need Ryanair and we need Aer Lingus, both independent and both competitive! Surely it’s in everyone’s interest to be able to go to both websites and compare prices than just one option! Anyone who thinks o’leary getting his hands on Aer Lingus is going to reduce prices is crazy! Need them both, keep them both but separate! ( as an aside: Aer Lingus is holding there own with €50m in 2010 and €85m in 2011 operating profits with €80m expected for 2012 so it’s nice to see two Irish(ish) company’s in profit)
Well said Dave.
can I get a loan of 700 million and buy aerlingus??..I’ll do a great job there!!!…don’t let O Leary get it!!!
Was that picture taken in 1989?
Hahaha I know, hilarious!
Well according to Wikipedia their BAC1-11s were retired in 1994 so it is at LEAST 18 years old…
not being pedantic but its an 737 (even says so on the engine), still pretty old looking livery
he’s talking about the Ryanair bac1-11 @ disgruntled …
Typical Irish giving out over Ryanair and its services when it’s flights are generally cheap. But yet people are paying over the odds for phones, electricity, food, clothes, cars the list goes on and on!
With Ryanair you get what you pay for when in comparison to nearly everything else we buy in this country we dont.
We need both of them. Michael gets both of them, he’ll hardly drop prices now will he? What other viable competition is there?
Ryanair cheap? Is it cheap to be charged €550 from Krakow to Dublin, and that was 5 years ago.
Anytime I’ve used ryanair it has been cheaper then aer lingus u just have to go by there rules! If not u get punished!
If Ryanair does take over Aerlingus i wouldn’t be surprised if he sold off many of the heathrow slots and moved most of the service to Stansted. The Heathrow slots Aerlingus currently have is estimated to be worth over £300 million. £300 million is equal to €400 million O’ Leary wants to pay €694 million for Aerlingus, makes the airline worth €294 million. Thats a very nice profit for Ryanair. I would not put it past O’Leary to sell the heathrow slots. Something Ireland would never get back. If Ryanair take over Aerlingus you will have no competition in your market. You will go back to paying high airfares for sure.
Aer Lingus is recognised overseas as the Irish airline. It is visitors’ window and welcome to Ireland. To sell it to RyanAir would be foolish. Aer Lingus offer much better service at very good fares. By the time you add on all the extra costs, attitude and inconvenience of RyanAir’s operations it often is cheaper and better to avoid RyanAir.
Surely EU Competition laws will block this from happening.
@Sean. €5/hour?? Is our minimum wage not set at €8.65/hour?
Heathrow slots valued at €400m, apparently €1bn in the bank.
God knows the value of the aircraft.
O’Leary will tear it apart, sell heathrow slots, use the sheer amount of flights to beat DAA with a stick regarding landing fees, and probably beat Stanstead and a few other airports up also. (alternatively, he’ll pull AL flights from the better locations like Barcelona, Malaga Etc and send them out to the stix like Ryanair flights).
Quite simply, O’Leary will destroy AL in favour of Profit.
Yeah, Those O’Learys they’re all the same. Feckin Feckers.
Most aerlingus staff now earn less then ryanair employees in equivalent jobs, will they get a rise!
Ciaran.
You are so so wrong.
The pay in Ryanair is appalling.
€5 / hour for cabin crew.
€30 for a 6 hour airport standby where they go to the terminal selling priority boarding tickets.
Hard to see it taking off.…
Public sector union member fawning over Aer Lingus?
I just booked a flight from Aberdeen to Dublin with Aer Lingus and had to pay STG 12 to check in my bag and STG 7 for my seat. Can’t remember ever having to do that before with AL? It reminded me of the once or twice I had to use Ryanair. Is that normal for AL or is it a new thing?
It’s been like that for a couple of years, don’t bother booking a seat, you can do it 24 hours before hand for free.
It wouldn’t let me proceed until i chose and paid for a seat .. thought it was strange like, but thanks for the heads up!
It’s a bit of a website issue there. It looks like you have to book a seat, you don’t just confirm at the bottom of the page and it will go through fine. I think it might be intentionality confusing just to get another few quid out of you.
I wonder what Clare Daly TD thinks about all this? n
I can’t be sure, but I’m sure that Mick Wallace will be nodding in agreement ;)
I hope this happens, apart from the thought there are no real differences regarding service from both airlines.
Wow that’s an ancient picture!
No relation BTW. I wish I was. Just to think, I could be a trolley dolly earning €5 per hour!!!!
I will give you a job as a trolley dolly and pay you €5.50 an hour :)
Hope it never happens, Aer Lingus all the way…if you book well enough in advance it’s around same price, Ryanair looks cheap at first glance but by the time you complete your booking and add all the ‘extras’ (like a seat), there’s very little in the difference.
A bit of a bollix I would say
i also hate ryanair low cost my ass, airports 120 km out of major cities
He said the cash offer represents “excellent value” for Aer Lingus shareholders and stakeholders, including passengers and employees
Excellent Value and Ryan Air are not words I would put in the same sentence.
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