ANALYSIS: Michael O'Leary insists Ryanair's bid for Aer Lingus makes 'industry logic'. Others disagree.
THERE WAS a distinct change of emphasis in Ryanair's €748 million bid for Aer Lingus yesterday compared to the failed offer of 2006.
While he could not resist having the odd dig at Aer Lingus's top brass yesterday, there was greater subtlety to the latest approach from Michael O'Leary. More than one olive branch was being waved.
"Two years ago it was a bit of a circus . . . we surfaced [after Aer Lingus's IPO] like a pied piper."
This time around O'Leary has written to the Ministers for Finance and Transport to seek meetings, and he is even prepared to meet the opposition parties to explain his proposals.
Aer Lingus will remain a separate company, with its own brand, its own staff, "the shamrock and the green uniforms". The Heathrow slots will be guaranteed.
In a seismic shift on a life-long position, O'Leary even indicated that he would recognise the Aer Lingus unions.
His focus yesterday was less on the pay and conditions of Aer Lingus workers and more on the amount his rival spends on advertising, maintenance and other costs. "For a start, the €50 million they spend on marketing could go down to about €5 million," he said.
It is a moot point, but mere window-dressing in relation to the real issue and the one he will have to address if he is to persuade the Government and, more importantly, the European Commission to change its mind and back a merger of the airlines.
Aer Lingus and Ryanair control 75 per cent of the traffic out of Dublin Airport and more than 60 per cent of air movements between Dublin and London, Europe's busiest air route.
Andrew Fitchie, an aviation analyst with Collins Stewart in London, yesterday told The Irish Timesthat other airlines would want to have a "death wish" if they were to contemplate taking on Ryanair in its own back yard.
No obvious remedy has been offered by Mr O'Leary, although this might emerge in the offer document, which will be issued shortly. We can only assume that he has an ace up his sleeve.
He also argues that it will be hard to say no to his plan if the European Commission allows Lufthansa to take control of Austrian and UK airline BMI and gives British Airways the green light to snaffle Spain's Iberia.
He has a point.
But the commission has already ruled on the competition implications out of Ireland, and it will require a compelling argument for it to change its mind.
Mr O'Leary will no doubt be hoping that the recession might prompt the Government to cash in its chips. The €187 million it would net from offloading its 25 per cent stake would pay a few bills.
Minister for Transport Noel Dempsey is said to be "neutral" on the proposal at present and keeping an open mind until Ryanair's offer is published in full.
The Government remains sore at the hammering it took over Aer Lingus's move to axe Shannon-Heathrow, which showed that the State has no influence at Aer Lingus.
Siptu and Impact have strongly opposed the latest Ryanair offer and are sure to make their feelings known to the Government.
Some believe that Mr O'Leary has broken cover now to smoke out a counter-bid. Aer Lingus has €800 million in cash reserves, valuable slots at Heathrow and a relatively new fleet of aircraft.
Mr O'Leary admitted yesterday that he would be buying Aer Lingus for practically "nothing".
Air France-KLM, which owns Irish airline CityJet, is an obvious candidate for a rival offer.
Mr O'Leary called for his offer to be "treated seriously", suggesting that it would make the merged entity one of Europe's big four, alongside BA, Lufthansa and Air France-KLM - and it would be Dublin-based.
"The industry logic and the national logic is compelling," he said.
He could be right.
