UPDATE 2-Ryanair makes fresh bid for rival Aer Lingus
* Budget aviation giant makes third attempt for control
* Offers 38 pct premium to Aer Lingus share price
* Says seeking at least 50 percent of airline
* Competition authorities pose largest threat to deal
DUBLIN, June 19 (Reuters) - Ryanair launched a third bid to take over Irish rival Aer Lingus on Tuesday, offering shareholders a 38 percent premium to the market in a deal that would require regulators to drop opposition to a merger.
Europe's largest budget carrier, which already owns just under 30 percent of Aer Lingus, said in a statement after markets closed that it would offer 1.30 euros per share in a bid to secure at least 50 percent.
The bid, which values Aer Lingus at 694 million euros ($880 million), would be subject to the approval of the European Commission, which in 2007 blocked an earlier bid by Ryanair for Aer Lingus on competition grounds.
The surprise bid came after repeated offers by Ryanair to sell its stake in Aer Lingus and days after Britain's competition watchdog launched a probe into the control it already wields at its Irish rival.
"This offer represents a significant opportunity to combine Aer Lingus with Ryanair, to form one strong Irish airline group capable of competing with Europe's other major airline groups," Ryanair's chief executive, Michael O'Leary, said in a statement.
Aer Lingus, which operates out of Europe's largest airports, would complement Ryanair's fleet, which focuses on cheaper regional bases, he said.
The Irish government, which is selling its own 25 percent stake in Aer Lingus as part of its EU/IMF bailout program, declined immediate comment, but has said in the past that it opposes an increase in Ryanair's control.
O'Leary has long pursued the takeover of Aer Lingus, Ireland's 75-year-old former flag carrier, to cap the rise of Ryanair, which started with one 15-seater plane in 1985.
In almost two decades in charge, O'Leary's low-cost model has come to dominate European aviation. Ryanair carried 77 million passengers last year compared with 9.5 million passengers at Aer Lingus.
But to complete the deal, Ryanair would have to convince authorities that a combined airline controlling 80 percent of traffic between the United Kingdom and Ireland would not stifle competition.
Britain's Office of Fair Trading last week ruled that Ryanair's ownership of a minority stake threatened competition.
"It is very hard to see how it would be accepted by European competition authorities," said Brian Devine, an analyst with NCB Stockbrokers.
Ryanair said it believed it could overcome concerns about competition in the Irish market that derailed earlier bids, citing consolidation within the industry and increased capacity at Dublin airport.
"Ryanair believes that any competition concerns ... can be addressed by Ryanair making appropriate remedies prior to the completion of this offer and by significant synergies and cost efficiencies resulting from this combination," it said in a statement.
It said the fact that an employee share trust, which had opposed a merger, has been disbanded also increased the chances of securing 50 percent approval.
Irish transport minister Leo Varadkar said he would make a statement on the offer after consulting with his cabinet colleagues.
Aer Lingus' shareholders include Etihad Airways, which bought a 3 percent stake in Irish airline in May.
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