Government defends decision to float Aer Lingus
The Government today insisted it was right to privatise Aer Lingus despite the shock takeover bid by Ryanair chief Michael O’Leary.
In an audacious move, Mr O’Leary has bought 16% of the State airline and vowed to take complete control, less than a week after it floated on the London and Dublin stock exchanges.
But Aer Lingus management unanimously rejected the offer and urged shareholders to follow suit.
John Sharman, Aer Lingus chairman, accused Mr O’Leary of undervaluing the company.
“The approach is unsolicited, wholly opportunistic and significantly undervalues the Group’s businesses and attractive long term growth potential,” he said.
Aer Lingus said such a buy-out would also cause significant regulatory problems.
Unions and opposition parties in Ireland fear a takeover will wipe out competition, drive up prices and lead to job cuts.
Taoiseach Bertie Ahern moved to allay concerns, insisting the Government would retain at least a 25.1% in Aer Lingus.
“The Government remains fully committed to competition in aviation markets and it will not be selling its shares in Aer Lingus,” he told the Dáil.
But he admitted the bid had come out of the blue: “The approach from Ryanair was unexpected.”
Minister for Transport Martin Cullen, who steered the airline towards stock market flotation, insisted privatisation was the right thing to do.
“There’s no question that the decision the Government took is still the right decision,” he said.
Ryanair has acquired a 16% stake in Aer Lingus, the Government holds 25.1% and staff have 9.65% under the ESOT share offer, but total employee holdings are thought to have soared since flotation last Friday.
Takeover would give Ryanair ownership of the Heathrow landing slots of Aer Lingus, although it insisted both airlines would continue to operate separately and compete vigorously on the 17 routes they both operate.
It is understood the Competition Authority has noted the potential takeover, but it is likely the EC’s Competition Commissioner Neelie Kroes will be called on to examine it, if it goes ahead, due to the scale of the buyout.
Ryanair said its offer of €2.80 a share would realise more than €500m for the Government, while Aer Lingus staff stood to pick up an average of €60,000 from the sale of shares.
Banking giant ABN Amro expressed surprise at the bid and said at first glance there seemed limited chance of it succeeding due to huge competition issues.
However, Ryanair said there were numerous precedents across Europe for two airlines from one country coming together to form a stronger, more diversified company.
Jack O’Connor, president of Ireland’s largest union Siptu, which represents around 1,800 Aer Lingus workers, said air travellers and employees would suffer the most.
“Anyone with a titter of wit could have foreseen this development,” he said.
“If they can pull it off it will enable Ryanair to take out its principal competitor on their main routes, acquire the critically valuable Heathrow slots, consolidate market dominance and dictate whatever price they like to airports.”
Siptu also insisted all employment agreements must be honoured.
Impact, the second largest union at Aer Lingus, said it was opposed to the proposed takeover.
“The union believes that an independent stand-alone Aer Lingus is in the best interests of the company, the country, passengers and staff,” the union said.
“There are clearly significant competition issues involved in the proposed takeover, which would create a near-monopoly on passenger air travel in and out of Ireland with obvious adverse implications for passengers and society.”
But opposition politicians said the move would wipe out competition.
“A takeover by Ryanair would result in a single dominant airline in the Irish market and immediately wipe out competition on British and European routes,” said Fine Gael transport spokeswoman Olivia Mitchell.
Roisín Shortall, Labour Party transport spokeswoman, said: “Now we are faced with the prospect of a privately-owned monopoly, with the bulk of its business elsewhere, controlling the great bulk of air traffic in and out of Ireland.
“The Government simply cannot allow this to happen.”
Eamon Ryan, Green Party transport spokesman, said: “If Ryanair’s attempted takeover of Aer Lingus is successful it would be a disaster for Irish Aviation policy.”
Sinn Féin Dublin TD Sean Crowe said: “Ryanair has a notoriously poor industrial relations record and an attitude of contempt to employees who attempt to stand up for themselves. With such a takeover I fear for the future of employee job security and working conditions.”
| Related Stories: |
|
