Ryanair owns a significant stake in Irish airline Aer Lingus and Ryanair CEO Michael O’Leary has made no secret of his desire to take over Aer Lingus and merge it into Ryanair. Ryanair’s hostile takeover bid was rebuffed 5 years ago but it retains a 25% stake in Aer Lingus to date.

British fair trading authorities have initiated an investigation into Ryanair’s Aer Lingus holdings and has questioned whether this is in the best interest of competition on routes between Ireland and the United Kingdom. In light of the fact that IAG was permitted to buy BMI and fold its operations into British Airways, I am somewhat suspicious of the UK’s interest in Ryanair.

The truth is that Ryanair is a lightening rod for controversy and Michael O’Leary makes it hard to ignore the airline. Ryanair’s holdings in Aer Lingus are a bit odd but, in my opinion, have actually forced Aer Lingus to behave more like a private airline which has only benefited the consumer. A merger between the two airlines seems a bit weird to me, however. The cultures between the two airlines aren’t compatible nor are the fleets at this point. Additionally, Ryanair has no real experience in operating an airline with long haul routes.

The UK is likely making Ryanair a focus of attention because of its bad boy antics in the UK and across Europe. It’s an airline that continues to make far more money than most european airlines and a thorn in the side of many governments. Europe isn’t above spanking such bad boys from time to time but that is all it is, a spanking.

I doubt that Ryanair would be forced to divest its holdings in Aer Lingus but I also doubt that anyone will permit it to merge with Aer Lingus either. Ireland’s government holds a larger stake in Aer Lingus and it has been most schizophrenic in its treatment of the airline by signaling a desire to see it privatized and at the same time holding on to its ownership stake like a valued family keepsake. If anything, the Irish Government has done more harm to Aer Lingus and the consumer than Ryanair could even be accused of.

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