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Ryanair's chief executive, Michael O'Leary, conceded yesterday that its contested €$1.48 billion ($2.82 billion) bid for Aer Lingus was unlikely to succeed because of the hostile reception from employee shareholders at the rival Irish airline.
The admission came as Ryanair reported record first-half profits and said it intended to make its first cash payout to shareholders since the no-frills airline listed nine years ago.
O'Leary said the €2.80-a-share offer for Aer Lingus was unlikely to proceed if, as appeared probable, the Employee Share Ownership Trust, which controls 13 per cent of the company, voted against the offer.
"It looks likely they are going to turn it down, which means it is unlikely our offer is going to succeed," he said.
He refused to be drawn on whether Ryanair would raise its offer. He said that, in the event of the bid failing, Ryanair would hold on to the 19.1 per cent stake it has built up in Aer Lingus and, as a "long-term and vocal shareholder", continue to press for cost reductions, lower fares and the removal of the airline's fuel surcharge.
"If this offer fails this time we will continue to be a very significant minority shareholder in Aer Lingus," O'Leary said. Ryanair remained committed, he added, to the creation of one strong Irish airline because Aer Lingus was too small, too high-cost and too insignificant to contribute in any meaningful way to the growth of European air travel over the next decade.
The return of capital to shareholders is likely to take the form of a share buy-back or a special dividend.
O'Leary said it would go ahead whether or not Ryanair's bid for Aer Lingus succeeded. The first closing date for the offer is next Monday and the offer will end on December 22, about the same time as the European Commission is due to decide whether to allow the takeover to proceed.
O'Leary said he was confident Brussels would clear the deal, with some conditions. Ryanair had offered legally binding undertakings to reduce fares, reduce the fuel surcharge and upgrade Aer Lingus' long-haul services if it gained clearance.
He was speaking as Ryanair reported a 38 per cent rise in first-half pre-tax profits to €372.1 million and raised its forecast for the full year. The airline now expects its after-tax profit for the 12 months to rise by 16 per cent to €350 million, compared with a previous forecast of an 11 per cent improvement.
- INDEPENDENT
