Michael O'Leary, chief executive officer of Ryanair Holdings Plc, gestures as he speaks during a Bloomberg Television interview in London, U.K., on Tuesday, May 5, 2015. The CEO said Ryanair has yet to be approached by British Airways parent IAG SA about buying its 30 percent holding in Aer Lingus Group Plc. Photographer: Matthew Lloyd/Bloomberg *** Local Caption *** Michael O'Leary

Joe Brennan and Kari Lundgren Dublin and London

IAG Chief executive Willie Walsh, having won over Irish lawmakers for his plan to buy Aer Lingus, will next have to tackle the combative boss of Europe’s biggest discount carrier to secure the takeover.

Ryanair, Aer Lingus’s largest shareholder with a 29.8 percent stake, has been careful to avoid commenting on whether it favours a deal, though chief executive Michael O’Leary has said the airline is open to discussing an offer if a formal approach is made.

IAG has said it wants at least 90 percent of Aer Lingus shareholders accepting the bid and it won’t buy without a commitment from both the government and Ryanair.


The situation left Ryanair “to play kingmaker” Jefferies analysts Mark Irvine-Fortescue and Ian Rennardson said in a note to investors yesterday. In a position of strength – Ryanair announced a 66 percent surge in annual profit on Tuesday – and having seen its own attempts to buy Aer Lingus rejected by regulators, the airline might “play hard ball,” they said.

“Presumably if Ryanair rejected the offer as too low, the onus would be on IAG to return with a higher bid for all shareholders,” the analysts said.

IAG, the parent company of British Airways, won government support for its e1.4 billion (R18.34bn) offer after the group “provided additional information and certain commitments in relation to its proposal,” according to a release on Tuesday following a cabinet meeting. IAG said it agreed with the independent directors of Aer Lingus on the offer, which consists of e2.50 in cash for each share, and 5c as a cash dividend.

Aer Lingus rose as much as 2.3 percent in Dublin. The stock was up 1.9 percent at e2.44 in late morning trading. IAG climbed as much as 2.1 percent in London. “We’re hopeful that Ryanair will see this as an attractive offer for their stake in Aer Lingus,” Walsh said on a conference call with analysts yesterday, adding that IAG is not relaying on the airline being “forced to sell.”

British competition authorities have demanded that Ryanair reduce its stake in Aer Lingus to no more than 5 percent, in a long-running dispute between the carrier and antitrust regulators.

Primary rival

A UK appeal court in February backed the country’s Competition and Markets Authority, which said that Ryanair’s Aer Lingus holding gave it too much control over its primary Irish rival. The ruling could be made irrelevant by an IAG takeover. “We have very carefully considered all of the issues involved and have concluded that supporting IAG’s offer is in the best interests of the airline,” Irish Transport Minister Paschal Donohoe said. The Irish government holds a 25 percent stake.

The move comes three months after the state rejected the airline’s indicative bid as it held out for more commitments on jobs and routes. IAG chief executive Willie Walsh, who began his career as a pilot at Aer Lingus, went on a charm offensive to calm concerns and negotiate with government representatives. IAG said Aer Lingus will retain its slots at Heathrow and will keep operating its key flights linking Ireland and the UK hub for at least seven years. – Bloomberg