Ireland opposed to Ryanair bid for Aer Lingus

DUBLIN Wed Dec 19, 2012 5:14am EST

An Aer Lingus plane docks at the gate at the Chopin International Airport in Warsaw February 6, 2012. REUTERS/Peter Andrews

An Aer Lingus plane docks at the gate at the Chopin International Airport in Warsaw February 6, 2012.

Credit: Reuters/Peter Andrews

DUBLIN (Reuters) - The Irish government has decided to oppose Ryanair's bid to take over Aer Lingus after studying details of the plan, the country's transport minister said on Tuesday in a blow to the budget airline's ambitions.

The European Commission, which is probing the 694 million euro bid on competition grounds and will have the ultimate say early next year, sent Ryanair a list of objections to the tie-up last month.

Ryanair has offered fresh concessions, which include an offer to sell some of Aer Lingus' landing slots at London's Heathrow airport to British Airways and slots elsewhere to Flybe (FLYB.L), according to a person familiar with the matter.

"The Ryanair offer and at least the remedies that are being reported are not sufficient in our view, so we won't support their bid and, in addition, won't co-operate with their remedies package," Transport Minister Leo Varadkar told journalists.

"The Commission will make its own decision, but we have given our views and they are around connectivity, competition and employment. We don't see any advantages for Ireland in what's being proposed and we see very significant potential risks."

Varadkar, who reiterated the government's intention to sell its own 25 percent stake in the former state carrier and said advisers will be appointed in the New Year, would not comment on what aspects of the remedies package the government opposed.

When asked about the remedies package, BA, which is part of the International Consolidated Airlines Group (ICAG.L), said it had signed a non-binding memorandum of understanding with Ryanair which is subject to EC approval as part of the review of the Ryanair-Aer Lingus deal.

Ryanair, which already owns 30 percent of Aer Lingus, said in a statement that as Dublin owns just 25 percent of the once dominant airline, it has no power to block the offer, adding that it had submitted an "unprecedented remedies package".

In its first package of concessions, Ryanair secured commitments from airlines to set up bases in Dublin, and said it would scrap some routes it and Aer Lingus currently fly from Ireland.

The Commission blocked Ryanair's first takeover bid for Aer Lingus in 2007. The Irish budget airline dropped a second offer in 2009. (Reporting by Padraic Halpin; additional reporting by; Foo Yun Chee is Brussels; editing by Conor Humphries, Louise Heavens and John Wallace)