Ryanair has confirmed it purchased 31.8 million shares in Aer Lingus, giving it a critical 25.2 per cent stake in the former State airline.

The deal, which saw Ryanair increase its stake in Aer Lingus from 19.2 per cent, means that Ryanair can block any significant transaction - such as an asset disposal - which requires shareholder approval. Aer Lingus shares touched €2.80 - the price of Ryanair's faltering €1.4 billion bid for Aer Lingus - before falling back to close up just 2 cent at €2.74. Fewer than one million units changed hands.

According to the stock exchange statement, Ryanair bought the majority of the shares at €2.75 each, meaning it spent about €85 million boosting its stake. Speaking at a conference in London yesterday, Aer Lingus chief executive Dermot Mannion said Ryanair's move confirmed his own view that the airline wasn't "going anywhere anytime soon".

Ryanair took the market by surprise on October 5th when it announced the takeover offer, one that is now expected to fail following an overwhelming vote against the bid by a group of Aer Lingus employees holding a critical 12 per cent stake. However, Tuesday's move implies that Ryanair's management is content to maintain a sizeable holding in Aer Lingus even if the offer lapses as expected next week.

Mr Mannion also said yesterday that Aer Lingus would present details of its cost-cutting programme to unions by the end of this week, as required by the takeover panel. - (Additional reporting Reuters)