Belfast Telegraph

Saturday 1 November 2014

Ryanair bid will capture 90% of Irish market: Aer Lingus boss

Aer Lingus chief executive Christoph Mueller warned that a successful bid by Ryanair to buy the carrier would result in monopoly conditions reminiscent of the days when his own airline dominated Irish travel.

Mr Mueller, speaking as Aer Lingus unveiled its second-quarter results, insisted that a merged Ryanair-Aer Lingus airline would control virtually all of the traffic out of Ireland, and to an even greater extent than when Ryanair made its first bid in 2006.

"The fact of the matter is relatively simple," he said as the airline also published a formal defence document to Ryanair's fresh bid to buy Aer Lingus in a €694m (£544m) offer.

"The monopoly which would occur in combining Ryanair and Aer Lingus would be even a larger monopoly today. It would capture 90% of all customers from Ireland," said Mr Mueller.

"Ironically, the travelling Irish public has experience of the situation for decades, when the monopolist was Aer Lingus."

Aer Lingus used to charge extremely high fares to travel between Ireland and Heathrow, in particular when virtually no price competition existed on services to the UK. Competitors were also prohibited from undercutting Aer Lingus prices. The European Court of Justice ruled in 1986 that air-fare fixing was illegal.

Aer Lingus, which has urged its shareholders to reject the latest Ryanair takeover offer, is also beginning to rack up costs associated with its own defence.

It has already spent €4.3m (£3.4m) on defending the bid.

And chief financial officer Andrew Macfarlane said yesterday that if the takeover battle lasts another six months, Aer Lingus is likely to incur a further €10m (£7.8m) in fees.

The Irish flag carrier forked out a total of €30m (£23.5m) defending Ryanair's previous two takeover attempts.

Mr Mueller said that Aer Lingus believes its legal advice is "very solid", and that Ryanair's third takeover attempt will also fall foul of the European Commission.

Ryanair boss Michael O'Leary and his team have already been courting the European competition watchdogs in an effort to appease any concerns they may have about the takeover bid.

Mr O'Leary said this week that he wants the EU competition authorities to have "every opportunity" to consider competition issues and remedies Ryanair will table in an effort to overcome any opposition to the bid.

£23.5m

The amount Aer Lingus paid to defend Ryanair's last two takeover bids

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