Ryanair Blocked by European Regulators in Bid to Buy Aer Lingus

Michael O'Leary of Ryanair

Ryanair CEO Michael O’Leary (pictured) cannot be happy that the EC has again blocked his airline’s bid to buy Aer Lingus

Irish budget carrier Ryanair has been blocked once again by the European Commission in its bid to take over fellow rival airline Aer Lingus.

The Commission said the combining of the two carriers would stifle competition and raise prices on consumers.

The New York Times reports:

‘The decision was widely expected after Ryanair — the largest budget carrier in Europe — said earlier that the commission would prohibit the deal, worth about 700 million euros ($900 million).

“The Commission’s decision protects more than 11 million Irish and European passengers who travel each year to and from Dublin, Cork, Knock and Shannon,” the European Union competition commissioner, Joaquín Almunia, said in a statement before a news conference.

Proposals made by Ryanair “were simply inadequate to solve the very serious competition problems which this acquisition would have created on no less than 46 routes,” Mr. Almunia said.’

Aer Lingus welcomes the Commission’s decision but on the other hand Ryanair vows to fight and will appeal the decision:

A statement by Ryanair’s Robin Kiely reads:

“The EU Commission has regrettably reversed its own precedents in order to prohibit Ryanair’s offer for Aer Lingus. Ryanair’s radical remedies package clearly addressed all of the concerns raised by the EU both in its 2007 prohibition and in its November 2012 statement of objections.

At a time when airlines in Europe and further afield are merging to form bigger competition champions (witness American Airlines’ merger with US Airways last week and Emirates’ recent strategic joint-venture with Qantas) the EU Commission has yet again set back competition and choice in Europe while delaying much-needed consolidation.

This decision leaves Aer Lingus as a small, isolated airline and leaves the two Irish airlines at the mercy of the Government-owned Dublin Airport monopoly, which continues to increase passenger charges, deliver third-rate services and oversee traffic declines. Over the past 5 years, as Dublin Airport has doubled its passenger charges, its traffic has declined from 24m to 18m per annum, while Aer Lingus continues to get smaller as it: (1) wet leases short-haul jet aircraft to Virgin to operate new routes from Heathrow to regional UK airports (making no contribution to Irish tourism); (2) rents long-haul aircraft to charter companies outside of Ireland; and (3) transfers more and more of its short-haul routes to smaller, turbo-prop aircraft.

Ryanair regrets that the EU Commission has again failed to apply its own competition rules and precedents in a fair and dispassionate manner. We regret that this prohibition is manifestly motivated by narrow political interests rather than competition concerns and we believe that we have strong grounds for appealing and overturning this politically-inspired prohibition. Accordingly, Ryanair has instructed its legal advisers to prepare a comprehensive appeal against this manifestly unjust prohibition.”

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