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Dublin: 3 °C Saturday 25 May, 2013

‘Reject Ryanair offer’, Aer Lingus advises shareholders

Corporate letter to airline’s shareholders urges them to reject takeover bid by rival Ryanair.

Image: Niall Carson/PA Wire

AER LINGUS HAS written to shareholders warning them that Ryanair’s takeover bid is not in their interest.

Ryanair currently holds an almost 30 per cent share in Aer Lingus. It’s first offer to takeover Aer Lingus was launched in 2007, but was rejected by the European Commission on competition grounds.

In a corporate document circulated to shareholders, Aer Lingus says that Ryanair’s latest takeover offer of €1.30 a share “fundamentally undervalues Aer Lingus and represents a significant discount to the intrinsic value of the business”.

In a letter today, Aer Lingus chairman Colm Barrington says that airline’s board “unanimously recommends that you reject Ryanair’s offer”, adding that shareholders should reject it by taking no action on the takeover bid.

“Your Board believes that this offer will be prohibited by the European Commission on competition grounds,” Barrington writes. “We have received legal advice that there is an even stronger case for prohibition this time than existed at the time of Ryanair’s first failed Offer. Our strategy is working and Aer Lingus is a strong and profitable business.”

In its results report for the first half of 2012, Aer Lingus said that it spent €4.3m on “advisory fees and other costs” arising from Ryanair’s proposed takeover of Aer Lingus.

Aer Lingus: operating losses down 83.6 per cent to €4.4m >

Aer Lingus announces partnership deal with Etihad >

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Comments (29 Comments)

  • Dave 31/07/12 #

    The usual uninformed comments. 1) Aerlingus is profitable (it loses money in winter season like nearly all carriers, but is profitable over the year), unlike most airlines in Europe at the moment.
    2) Low cost Long haul has been tried by several airlines now. In every case it has failed. Why do you think Ryanair has not done it itself? It doesnt need Aer lingus to break into long haul for god sake!
    3) Other airlines are interested in Aerlingus, like Etihad, which has openly stated it wants the governments share. 4) All the free marketeers here saying how great Ryanair have been for fares want to see them command 80% of the market, and have a monopoly on all but the very biggest routes?

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  • The value of a public company is its share price. How can a bid in excess of that price under value the business?

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  • Lets hope sense prevails and Aer Lingus shareholders stay away from the Great Satan. Like a lot of people I will pay extra to fly with AL and be treated with some dignity on my trip, rather than like livestock. What O’Leary could do to AL if he got control doesn’t bear thinking about.

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    • Why not PJ? What great insight do you have that Ryanair will be the ruin of AL? The ruin of AL to date is the unions, they fight over cost saving programmes, yet their members are significant shareholders – talk about shooting yourself in the foot! Cost savings are designed to provide more profit for the shareholders yet they oppose any such moves – don’t see the sense in that myself?? Perhaps I am missing something there??

      IMO the better the devil you know, than the one you don’t! Do you really think the likes of Eithad or some other big airline will take on AL with it’s massive whole in the employees pension fund and retain all the employment here. I doubt it, more likely AL would be swallowed by the bigger airline, all services that can be moved out of the country creating an immediate cost saving will go straight away and piece by piece AL will be gone and now you are at the mercy of foreign airline with Ryanair as the sole national carrier. So why not work with O’Leary, he has a proven track record certainly on the shorthaul flights, lets see what he can do with longhaul, ultimately Ryanair will be our national carrier. So if you can’t beat them – join them!!

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    • BTW, why write to the shareholders if they believe the Euro Commission will oppose the takeover on competition grounds? Sounds to me like the Euro Commission has changed tack on these mergers giving the current crisis.

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  • More press release journalism about shareholders and investors with little relevance for ordinary people. And nothing about the great pensions swindle, now in play at Aer Lingus and DAA.

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    • pagan 31/07/12 #

      Mick OLeary goes on about the monopoly of the DAA running cork,Dublin airport and Shannon airport before it was taken out of semi state ownership.Is he not contracting himself about monopolies if he gets hold of aer lingus.He will hold the biggest monopoly in the history of the state.
      As for long haul Ryan air wont pay to land in main airports in the east or west cost of America.Like 99% of the airports they use in Europe you will be left 2hours by coach to your major destination..

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  • Is the price of anything not what some Is prepared to pay for it ? What other bids are on the table ,why don’t we see a management offer the company is undervalued or where is the emeriates offer.

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    • The national airline is not making profit,so can they tell me why they dont wanna sell…until they can prove the company is making any profit it will be very hard to convince shareholders not to sell…

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    • Wish i can delete my 1st comment cos i smell something fishy with ryanair..

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    • Wish you could delete it too, They are making a profit, their a public company , check their returns for ‘proof’

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    • The price of something to a company that’s going to run it too the ground, borrow against it’s assets, allocate profitability to it’s mainline business and let it collapse differs in value to a company that’s going to invest in, develop and use an airline to feed into it’s mainline functions. As do the associated risks

      Google ‘Ansett’ Australia’s once second largest airline….

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    • Tensing, you clearly have no idea what you’re talking about because if you did you would know that it is Etihad, not Emirates who are interested in Aer Lingus AND you would be more then aware of yesterday’s announcement that the two airlines are launching a significant codeshare agreement with a view of building a stronger business together!
      And a great partnership it would be for both companies and their customers!

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    • I won’t sell my house because I feel if I wait 55 years the intrinsic value will be more….joke

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  • Rocco 31/07/12 #

    I say accept. Ryanair has done great things for short haul flights and it would be brilliant to see them shaking up the long haul market.

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  • bobhaugh 05/08/12 #

    Show me an example where lack of competition is good for the consumer and I will vote for FR to takeover EI. It’s all about choice. EI keeps FR fares in check and vice versa. An island should not have one gate keeper. Several million pax a year are prepared to pay more (in some cases) for frills and why not. Do you really believe fares would come down if FR had virtually no completion. Look the fares for routes where they don’t compete (Malta) for example. Always considerably higher than contested routes of similar duration.

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  • Barro 31/07/12 #

    I welcome a takeover, anyone seen Ryanairs profits? consistently better than Aer Lingus’ losses.

    Be it MOL or another airline it has to happen sooner or later.

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  • Come on o Leary , imagine how this country could open up internationally if Ryanair gave AL a shake and went to create a long term influx of tourists and employment spin-off that is well needed by Ireland , Ryanair are the most profitable airline in the world and flights are always full and they would mirror this on transatlantic flights , it wasn’t so long ago our minister for transport said that he would not sell AL for less than 1 euro a share … Undervaluing ?

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    • They are not the most profitable airline in the world. That is Emirates.
      They are not the biggest airline in the world, not even Europe that is Lufthansa.
      They are not Europes most on time airline that is SAS.
      It’s all lies lies lies.

      Ryanair ARE Europes most subsidised airline to the tune of 305 million Euro per year. Now there is a fact.

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  • MO’L, ask not what you can do for the airline, but what the airline can do for you.

    Reply

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