Govt more open to Ryanair's Aer Lingus bid -report

DUBLIN, Dec 7 (Reuters) - Irish government opposition is weakening to Ryanair's RYA.I 750 million euro ($952 million) bid for former state airline Aer Lingus AERL.I, the Sunday Tribune newspaper reported.

The government, which owns more than 25 percent of the loss-making flag carrier, opposed Ryanair’s 2006 bid for Aer Lingus, which was blocked by the European Union on competition grounds.

There is now “an awful lot less opposition” to the bid, the Sunday Tribune quoted senior government figures as saying.

A spokeswoman for the transport ministry said it would not comment until Ryanair submits its formal bid for Aer Lingus. Europe’s biggest budget airline said on Thursday it would publish the formal bid within the next two weeks.

“There has been a sea-change in attitude from two years ago,” the newspaper quoted the unnamed government sources as saying.

“I wouldn’t put it at 50-50 that the government will endorse the deal. It’s more like 35-65. But two years ago it was 99-1 (against),” one senior figure told the Sunday Tribune.

Ryanair, which already owns almost 30 percent of Aer Lingus, has offered 1.4 euros for each Aer Lingus share it did not own, half the price of its previous bid in 2006.

On Thursday, it also offered to recognise unions at Aer Lingus, to create 1,000 jobs and to give government full control over Aer Lingus’s valuable landing slots at London’s Heathrow airport.

Aer Lingus’s board said it would fight vigorously to defend the company’s independence and added that it expected investors to support it.

Employees hold more than 14 percent in Aer Lingus, and a separate report by the Sunday Independent newspaper said Ryanair would try to convince pilots to back the deal.

Ryanair will this week offer to recognise the Irish Airline Pilots’ Association if the union pledges its entire pension fund stake in Aer Lingus to back the bid, the newspaper said.

Unions representing Aer Lingus workers have already dismissed Ryanair’s offer of recognition.

Ryanair Chief Executive Michael O’Leary has said he would keep the two airlines separate and has characterised his offer as a lifeline for Aer Lingus, which is expected to report operating losses this year and next due to a deepening recession.

“We’re the white knight here,” O’Leary told the Sunday Independent. “We’re the only solution the government and Aer Lingus have to securing Aer Lingus’ future.” (Reporting by Andras Gergely, editing by Will Waterman)