O’Leary vows to press ahead with €750m bid for Aer Lingus
Ryanair chief Michael O’Leary will press ahead with plans to take over Aer Lingus despite the decision of the board to shoot down his second bid for the airline.
Last night Mr O’Leary said he would “ignore” the wishes of the board of his bitter rival and urged the Irish government — which owns 25% of the airline — to consider his €750m offer.
The government is still open to a possibly takeover by Ryanair, which would net the Exchequer €188m if it sells its stake to Mr O’Leary.
Transport Minister Noel Dempsey and Finance Minister Brian Lenihan are expected to meet Mr O’Leary to discuss his plans in the near future. Mr Dempsey said his government will have to wait and see the details of the Ryanair offer before making any decisions on the matter.
And Mr O’Leary still held out some hope last night that his offer would be accepted by the major shareholders.
Just hours after the budget airline boss outlined the benefits of a merged “mega-carrier”, the board of Aer Lingus turned down his bid as it claimed the Ryanair offer “significantly undervalued” its worth.
Ryanair, which already owns almost 30% of the carrier, unveiled its new offer earlier yesterday at €1.40 a share.
It promised a new “strong Irish airline group” with a domestic fleet twice its current size and 1,000 new jobs.
The bid valued the airline at €748m — around half the €1.48bn valuation placed on it by Ryanair when it made an initial offer for the airline two years ago. Ryanair said the merger of the two airlines would save Aer Lingus, which announced losses of over €22m this year.
Aer Lingus turned down the offer it said undervalued the company and because the European Commission had found a merger would be anti-competitive two years ago.
However, sources say the economic climate has changed dramatically since that time.
While Aer Lingus “strongly” advised shareholders to take no action over the offer, Mr O’Leary insisted the bid had not yet failed.
He said the main shareholders — the Irish government and employees — should not “worry about the board”.
Mr O’Leary did not deny that the acquisition would be a “steal” because of an €800m cash reserve but said the reserves were “dwindling away” due to losses.
Mr O’Leary also pointed out that the government had not turned down the offer.
However, the board of the airline includes government and union nominees. Unions and the Labour Party bitterly opposed the Ryanair move.
No funny faces from the head of Ryanair
Colourful Ryanair boss Michael O’Leary put his antics aside yesterday as he revealed his bold bid to buy-out struggling rival Aer Lingus.
Refusing to even give the thumbs up for the cameras, it was clear to photographers that this was no day for the chief executive to be playing the fool.
There were no funny faces, fancy dress costumes, jumping on tables, or bikini-clad air stewardesses as he hosted a press conference in Dublin flanked by board members and a leading stockbroker.
Mr O’Leary even wore a suit jacket and kept the swearing to a minimum as he painstakingly picked out failures in Aer Lingus’ most recent performance results.
“It’s shambolic,” said the boss of the budget airline of Aer Lingus’ failure to fill seats from its new Belfast base.
“You really have to be remarkably incompetent to only fill 40% of seats to somewhere like Amsterdam.”
Mr O’Leary sent a stern warning to Aer Lingus and the Irish government that it had a bleak future without joining Ryanair.
He said the airlines could run side by side — just like the Sun and The Times are owned by Rupert Murdoch.
He then slammed Aer Lingus costs this year, taking a pop at its £42.5m budget for advertising and selling — comparing its soft toned television ads featuring floating feathers to the carrier’s board of management.
“This is a serious offer, in serious times and it needs to be treated seriously,” he said.
“We are not here to promote free flights and we’re not here promoting cheap seats or charity calendars.
“We want to merge two Irish airlines to form one strong Irish airline group and I think the logic of it and the industrial logic and the national logic of it is compelling.”