Ryanair offer 'undervalues Aer Lingus', say airline's board

"In evaluating any offer, the Board must consider the uncertainties and risks relating to it," said an Aer Lingus statement released this afternoon.

"The UK Competition Commission (“CC”) is currently investigating Ryanair’s 29.82% holding in Aer Lingus with the result that Ryanair is now under a legal prohibition from undertaking any further integration with Aer Lingus without the consent of the CC; and may be subject to an order to sell down its shares at the end of the CC investigation.

"Furthermore, the Board notes that Ryanair’s unsolicited offer in 2006 was blocked by the European Commission and was not capable of completion and that Ryanair’s second offer, in 2008, was withdrawn. Consequently there is significant uncertainty that any offer from Ryanair, if made, would be capable of completion."

The Aer Lingus board also defended the financial standing of the company, saying that the Ryanair offer undervalues the company.

"The Aer Lingus management team has delivered a significantly improved operational and financial performance since 2009, transforming Aer Lingus into a robust, profitable airline," the statement continued.

"Management’s successful strategy of focusing on demand-led network management and the introduction of extensive cost saving initiatives has delivered sustained and improved profitability, resulting in a turnaround in operating performance of approximately €130m since 2009.

"Aer Lingus has a proven business model and a strong balance sheet including cash of in excess of €1bn at March 31, 2012, leaving it well positioned for the future.

"The board, having considered the offer with its advisers, believes the offer, even if it is capable of completion, undervalues Aer Lingus.

"Aer Lingus shareholders are accordingly advised to take no action in relation to the offer."

Earlier, Minister Ruairi Quinn says the potential loss of competition for an island nation would have to be approached carefully.

"I think that competition is important," he said.

"The loss of competition on something as strategically important as air transport from this island to anywhere else is something that we would have to be very, very careful about before we make any decision."

Independent TD Shane Ross said the Government should do everything possible to avoid creating a monopoly which would be bad for consumers.

"It would be useful if the Taoiseach knocked this particular proposal on the head here and now and said: 'We are not going to facilitate any airline from anywhere getting into a position where it holds 80% of the traffic and controls 35%'," he said.

IMPACT General Secretary Shay Cody said that previous takeover bids by Ryanair were blocked by the European Commission and he says nothing has changed since then.

"A merger or a takeover between the three companies would leave something in the region of 90% of air traffic in a single company," he said.

"The last time the European Commission took the view that even if you had merger consolidation in Europe, you could always get in your car and drive on a motorway from say Amsterdam to Paris".

"You can't do that out of Ireland, so there's very particular competition issues."