Ryanair In Danger of Losing Stake in Aer Lingus

PUBLISHED: May 30 2013 @ 04:36 | Comments (0) | More info about Kenneth G. Mondero

The battle continues as Ryanair Holdings plc (LSE:RYA) received another slapped in the face after the UK’s Competition Commission decided the Ryanair may have to reduce its shareholdings in competitor Aer Lingus Group plc to make way for more competition in the air traffic between the UK and Ireland.

UK’s anti-trust agency’s provisional findings stated that Ryanair’s 29.8% stake in Aer Lingus is huge enough to influence major corporation decisions, including raising capital and implement strategies to boost competitiveness.

Bizarre and Manifestly Strong

The decision was met with strong opposition from one of the UK’s largest carriers.

“This provisional decision by the UK CC is bizarre and manifestly wrong,” stated Ryanair’s Chief Executive, Michael O’Leary.

According to O’Leary, Ryanair’s stake in Aer Lingus does not obstruct other firms from acquiring stakes in the company, citing Etihad Airways’ acquisition of 3% stake recently.

He added that the decision of the UKCC was in violation of the EU Treaty on sincere cooperation by going a different way compared to EU’s findings last February 2013, which admitted that competition between the two firms intensified since 2007.

Ryanair has, over time, acquired a significant stake in Aer Lingus following the latter’s flotation in 2006 and has already made three unsuccessful bids to fully acquire the airline.

According to UKCC, however, competition would have been stronger if Ryanair did not have such a significant interest in Aer Lingus.

UKCC’s Deputy Chairman and head of the Ryanair-Aer Lingus inquiry stated the agency found that Ryanair’s shareholdings is like to weaken its main competitor on routes between the UK and Ireland.

The decision, which becomes final on 11^th July 2013, was welcomed by Aer Lingus, the management of which pushes for a reduction of Ryanair’s interest in the firm. Ryanair has until 20^th June to file the necessary legal actions to contest the provisional findings.

On the London Stock Exchange, Ryanair’s share price skidded by 0.3% €6.90, at 10:30 GMT, following the news.

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