The Government's pledge to back IAG's €1.4 billion bid for Aer Lingus shifts the spotlight to the airline's biggest shareholder, Ryanair, which owns 29.8 per cent of its rival.
Ryanair has launched three unsuccessful bids to take over its smaller rival during the last nine years. Each failed because it ran into opposition from the Government and competition law regulators in Europe.
Ryanair said on Tuesday its board would consider any offer for its share on its merits. However, the picture is more complicated than this.
Legal battle
If Ryanair does decide to sell, the UK Competition and
Markets Authority
(CMA) will have to agree to allow it to sell its shares to IAG, as the regulator has been locked in a legal battle with the Irish airline since 2013.
Ryanair is shortly set to ask the British supreme court to overturn a CMA ruling demanding that it cut its stake in Aer Lingus to 5 per cent.
When it originally ruled in 2013, the CMA also told Ryanair it could not sell any of its Aer Lingus shares without first getting the authority’s approval.
This is a step the CMA takes with any such order, as it appoints its own trustee to manage the actual sale of the shares. As the whole issue is still before the British courts, the bar on Ryanair doing anything with its Aer Lingus shares remains in place.
CMA itself has yet to say what it was likely to do in response to a formal IAG offer for Aer Lingus. It has also been suggested that Ryanair may wait for the supreme court ruling before deciding on the IAG offer.
Two issues
Ryanair’s chief commercial officer, David O’Brien, insisted on Tuesday that it was wrong to mix up the two issues. “They are completely independent of each other,” he said.
Industry sources have consistently speculated that Ryanair would ultimately be willing to sell its Aer Lingus shares to IAG, as the €2.55 a-share offer means it would recover almost all of the €400 million it spent buying them.
