Ryanair Willing To Sell Aer Lingus Slots

May 14, 2007

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Ryanair has said it would be willing to sell Aer Lingus landing slots at London's Heathrow Airport in a bid to win European Commission approval for a takeover of the Irish flag carrier, according to two sources familiar with the situation.

The European Commission has until July 4 to decide on Ryanair's unsolicited offer, which originally valued Aer Lingus at EUR1.48 billion euros (USD$2 billion).

The European Union competition regulator has rejected previous proposed solutions as insufficient to overcome competitive problems with the deal.

In March, the Commission said in a confidential statement of objections that Ryanair would gain unacceptable dominance at Dublin Airport with an overwhelming majority of slots.

But Ryanair has now offered to sell Aer Lingus slots at Dublin Airport and Heathrow for flights between the two airports, the sources said. The slots would be sold to British Airways and to Air France's Cityjet, which flies from Dublin, they said.

A spokeswoman for the European Commission had no comment. Ryanair was not immediately available for comment.

The proposal is among Ryanair's new package of remedies, the sources said. They did not disclose the other proposed concessions.

However, experts said Aer Lingus shareholders who object to the merger would probably object to the divestitures, particularly the Irish government, which has called the slots a strategic asset.

Ireland is in the midst of campaigning for a May 24 general election in which the ruling Fianna Fail party of Prime Minister Bertie Ahern faces a strong challenge from center-left parties.

The Irish government holds 25 percent of the shares and with airline employees, who hold an additional share, would be in a position to block such divestitures.

Ryanair has withdrawn its bid for Aer Lingus pending the European Commission decision.

But Ryanair Chief Executive Michael O'Leary said last week the company would consider a second bid for Aer Lingus if Ryanair received a favorable outcome from the EU review and the Irish takeover panel.