Will it be third time lucky for O'Leary?

ANALYSIS:EVEN IF Ryanair wins the approval of Aer Lingus shareholders, the low-cost carrier will have to enter a lengthy negotiation with competition regulators in order to complete a purchase of its Irish rival, with which it competes on a number of routes.

The European Court of Justice ruled in 2007 that Ryanair could not acquire the whole of Aer Lingus – a verdict appealed by Ryanair but upheld in 2010.

Ryanair argued yesterday that since 2006, Europe’s flag carrier airlines have continued to consolidate. It cites Air France’s purchase of a 25 per cent stake in Alitalia; BA’s merger with Iberia to form IAG, which subsequently acquired British Midland; and a number of purchases by Lufthansa.

“Each of these transactions has been approved by the competition authorities,” Ryanair notes, adding that it would make “appropriate remedies” to alleviate the European Commission’s competition concerns.

European Union regulators blocked Ryanair’s bid for Aer Lingus in 2007, saying a takeover would allow the discount airline to dominate 35 routes and control 80 per cent of the market in Dublin.

Antoine Colombani, a spokesman for the European Commission in Brussels, declined to comment on Ryanair’s plans to revive the bid.

The EU regulator said in 2007 it couldn’t force Ryanair to sell its remaining stake in Aer Lingus.

“This is an aggressive move by Ryanair and one would think the European Commission would be highly skeptical towards any argument that the merger could be justified based on the financial crisis,” said Douglas Lahnborg, a competition lawyer at Orrick Herrington and Sutcliffe LLP in London.

Ryanair is also facing a full investigation by the UK’s Competition Commission of its holding in the smaller carrier after the national regulator said it may lead to higher prices.

The Office of Fair Trading, Britain’s lesser antitrust watchdog, asked for the probe earlier this month.

Ryanair said yesterday its offer did not need the support of the Government’s 25 per cent to succeed in reaching the 50 per cent acceptance level, but that it believed it likely the Irish Government would seek to dispose of this stake in early 2013 as part of its commitments under the terms of the 2010 bailout of Ireland by the European Union, the European Central Bank and the International Monetary Fund troika.

It said that “the timing of this offer is designed to allow the European Commission sufficient time to complete its competition review prior to the end of Q1 2013 at the latest”.

Mr O’Leary claimed last September that Ryanair would “be a relatively boring company for the next year or two”, adding that “after 25 years of relative madcap growth, a year or two of being boring might be of benefit to shareholders”.

The new bid for Aer Lingus does not require the approval of Ryanair shareholders, but Mr O’Leary said the acquisition would earn them “superior returns”.