Despite a 2010 EU ruling against a merger with Aer Lingus, Ryanair is pressing forward with its bid to acquire Aer Lingus by offering a 38% premium for outstanding shares with an acceptance date of September 13.   This is, for all intent and purpose, a hostile takeover bid and those rarely succeed in today’s world.

Ryanair would have improved its chances by getting some plan out into the media as to how it would deal with anti-trust issues with such an acquisition.  It hasn’t and investors therefore are unlikely to view this bid as something that can happen.

One wonders just how Ryanair would operate Aer Lingus vs Ryanair.  I would speculate that if Ryanair could takeover Aer Lingus, we would see the domestic component folded into Ryanair and the international component used to establish some sort of LCC long haul carrier much like Air Asia X.  This would leave Ireland without a full service carrier and I suspect Irish politicians won’t be amused by that prospect.

Amused or not, it’s time Ireland face the music on supporting a flag carrier like Aer Lingus.  While Aer Lingus isn’t an Alitalia or Air India, it isn’t an extraordinary concern either.  I am reminded of Malev, the Hungarian carrier which folded earlier this year, when I think of Aer Lingus.   Malev crumbled under relatively small debt (compared to many carriers) and could have been saved if the government really wanted to do so.  Hungary rightfully decided to let it go and to let the marketplace replace the airline.

While I think Aer Lingus isn’t in a position to experience that today or 6 months from now, it isn’t in a position to fight a turning tide should it find its financial prospects suddenly diminished anymore.  Let’s not forget that Ireland is no longer a tiger economy and will be experiencing recessionary times for a while and stagnant growth at best.

Filed under: Airline News by ajax
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