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Ryanair must cut Aer Lingus stake, says Competition Commission Ryanair must cut Aer Lingus stake, says Competition Commission
(21 days later)
Britain's competition watchdog has ordered Ryanair to cut its stake in smaller Irish rival Aer Lingus to 5% from 30%, saying the arrangement had the potential to substantially reduce competition.Britain's competition watchdog has ordered Ryanair to cut its stake in smaller Irish rival Aer Lingus to 5% from 30%, saying the arrangement had the potential to substantially reduce competition.
Ryanair said on Wednesday it would appeal against what it described as a "bizarre and manifestly wrong" decision in a legal process that could last years.Ryanair said on Wednesday it would appeal against what it described as a "bizarre and manifestly wrong" decision in a legal process that could last years.
Six months after the European commission blocked Ryanair's third bid to take over Aer Lingus, the decision appears to all but end Ryanair boss Michael O'Leary's seven-year pursuit of Ireland's former flag carrier.Six months after the European commission blocked Ryanair's third bid to take over Aer Lingus, the decision appears to all but end Ryanair boss Michael O'Leary's seven-year pursuit of Ireland's former flag carrier.
But appeals against both decisions mean Aer Lingus management is unlikely to quickly fulfil its ambition of getting Ryanair off the company's share register and replace it with institutional investors or a strategic partner.But appeals against both decisions mean Aer Lingus management is unlikely to quickly fulfil its ambition of getting Ryanair off the company's share register and replace it with institutional investors or a strategic partner.
O'Leary has made three failed takeover bids for 75-year-old Aer Lingus in an attempt to cap the rise of his upstart airline that began in 1985 with one 15-seater plane.O'Leary has made three failed takeover bids for 75-year-old Aer Lingus in an attempt to cap the rise of his upstart airline that began in 1985 with one 15-seater plane.
Ryanair's low-cost model has since come to dominate European aviation, carrying 77 million passengers last year compared with 9.5 million passengers at Aer Lingus.Ryanair's low-cost model has since come to dominate European aviation, carrying 77 million passengers last year compared with 9.5 million passengers at Aer Lingus.
Having already written down the €407m (£350m) it paid for the Aer Lingus stake in 2007-09 to €80m, Ryanair could actually book a profit at the current share price, which would value the stake at around €270m. However, it says no one has expressed an interest in buying it.Having already written down the €407m (£350m) it paid for the Aer Lingus stake in 2007-09 to €80m, Ryanair could actually book a profit at the current share price, which would value the stake at around €270m. However, it says no one has expressed an interest in buying it.
Britain's Competition Commission ruled that Ryanair's shareholding had "led or may be expected to lead to a substantial lessening of competition between the airlines on routes between Great Britain and Ireland."Britain's Competition Commission ruled that Ryanair's shareholding had "led or may be expected to lead to a substantial lessening of competition between the airlines on routes between Great Britain and Ireland."
Aer Lingus's commercial policy and strategy were likely to be affected by Ryanair's shareholding and it was likely to impede Aer Lingus from being acquired by another airline, the watchdog added.Aer Lingus's commercial policy and strategy were likely to be affected by Ryanair's shareholding and it was likely to impede Aer Lingus from being acquired by another airline, the watchdog added.
Ryanair said the ruling violated European law due to contradictions with recent findings of the European commission and that it failed to acknowledge Ryanair's recent offer to unconditionally sell its minority stake to any other airline that secures Aer Lingus shareholder approval for a takeover bid.Ryanair said the ruling violated European law due to contradictions with recent findings of the European commission and that it failed to acknowledge Ryanair's recent offer to unconditionally sell its minority stake to any other airline that secures Aer Lingus shareholder approval for a takeover bid.
O'Leary said in a statement that Ryanair's lawyers would lodge a complaint to the competition appeal tribunal in the coming weeks.O'Leary said in a statement that Ryanair's lawyers would lodge a complaint to the competition appeal tribunal in the coming weeks.
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