Regrets EU Comms Dec
Ryanair Holdings PLC
20 December 2006
RYANAIR REGRETS EUROPEAN COMMISSION DECISION
TO REFER AER LINGUS TAKEOVER OFFER TO PHASE TWO
BUT IS CONFIDENT THAT CONSUMERS AND COMPETITION
WILL WIN IN THE END
Ryanair today (Wednesday, 20th December 2006) expressed its disappointment at
the European Commission's decision to refer its offer for Aer Lingus to a Phase
II investigation. This further investigation could take between three to five
months, and Ryanair regrets this unnecessary delay and any uncertainty it may
cause for Aer Lingus shareholders and consumers who want access to lower fares
and better service.
Responding to the European Commission's announcement today, Ryanair's CEO,
Michael O'Leary, said:
'We are disappointed with the delay in the European Commission's approval of
Ryanair's offer for Aer Lingus. This could and should have been decided in Phase
I. We believe that this delay is unnecessary, for the following reasons:
1. Ryanair does not accept the Commission's claim that it did not have
sufficient time to consider our proposed remedies. The Commission were
able to market test Ryanair's first set of proposed remedies within a
five working day period (Thur 30th Nov to Wed 6th Dec). The final list
of remedies was submitted to the Commission, at its request, five
working days (Thur 14th Dec to Wed 20th Dec) prior to the end of the
Phase I deadline, allowing a similar period of time for consideration
and market testing. We do not believe it is reasonable for the
Commission to claim, that it did not have sufficient time to market test
these remedies.
2. Ryanair is aware that in previous airline consolidations the final
remedies were still being tested and negotiated between the airlines and
the European Commission the night before the decision was due. This was
particularly so in the case of the Air France-KLM merger.
3. This decision to refer the Ryanair-Aer Lingus takeover to a Phase II
investigation flies in the face of the European Commission's stated
policy of encouraging consolidation amongst European airlines. Given
that much larger airline consolidations (most recently the Air
France-KLM merger) have been approved under the Phase I process, it is
difficult to understand the Commission's failure to follow its own
stated strategy of promoting airline consolidation by granting Phase I
approval in this case.
4. The Commission's decision in this case is inconsistent given that the
Air France-KLM merger was approved in Phase I while offering up just
over 120 slots at its main airports. By contrast, Ryanair offered to
surrender over four times more slots (over 500) of the combined Ryanair/
Aer Lingus slots, including valuable slots at London Heathrow, in order
to secure Phase I approval, yet the Commission has failed to follow its
own consolidation policy or the precedents set in the approved Air
France-KLM merger.
5. The Commission's inconsistency in giving Phase I approval for the Air
France-KLM merger, which controlled 62% of the movements at Paris
Charles de Gaulle Airport, contrasts markedly with its failure to give
Phase I approval to the Ryanair-Aer Lingus deal which would, if
successful, have less (just 61%) of the movements at Dublin Airport. The
Commission appears to be applying different and totally inconsistent
principles to the Ryanair-Aer Lingus deal than it applied to the much
larger Air France-KLM deal, which was waved through with little
difficulty in Phase I.
6. The commitments made by Ryanair in connection with this takeover,
which include, reducing Aer Lingus fares and fuel surcharges,
maintaining Aer Lingus as a separate stand alone airline and retaining
its brand, make this transaction a pro-competition, pro-consumer
consolidation. Given Ryanair's commitment to reduce Aer Lingus'
short-haul fares by almost 10% over four years, there is no basis for
the Commission's claim that the proposed acquisition 'could give rise to
higher fares than would be likely if the two carriers remained
separate'. The fact that Aer Lingus' fares will fall under Ryanair's
ownership would make this consolidation far more consumer friendly than
the phase I approved Air France-KLM merger which has resulted in average
fares and yields rising significantly in the eighteen months since that
merger.
'Nevertheless, Ryanair recognises the European Commission's right to refer this
transaction to a Phase II investigation. This longer time period will, we
believe, allow the Commission to fully market test both the transaction and the
revised remedies, which Ryanair will propose. Ryanair remains confident that its
offer for Aer Lingus - which is consistent with the Competition Commission's
stated policy on airline consolidation - will win EU competition approval under
the Phase II procedure.
'We will continue to work closely with the European Commission to assist them in
their review of this transaction, which is in line with the European
Commission's stated aim of encouraging consolidation amongst European airlines.
This merger also provides Aer Lingus with a secure long term future as part of
one strong Irish airline group, whereas, on its own, we believe it is doomed to
a bleak future as a small, regional, high cost airline which recorded dismal
financial results (including operating losses) in the first half of 2006, and
whose reported load factors have declined significantly in recent months.
'Ryanair remains committed to acquiring Aer Lingus and will continue this
process to - what we believe will be - the successful conclusion of this Phase
II investigation'.
Ends. Wednesday, 20th December 2006
Enquiries:
Ryanair
Telephone: +353 1 812 1212
Howard Millar
Davy Corporate Finance
Telephone: +353 1 679 6363
(Financial Adviser to Ryanair)
Hugh McCutcheon
Eugenee Mulhern
Morgan Stanley Telephone: +44 20 74255000
(Financial Adviser to Ryanair)
Gavin MacDonald
Colm Donlon
Adrian Doyle
Murray Consultants
Telephone: +353 1 498 0300
(Public Relations Advisers to Ryanair)
Pauline McAlester Telephone: +353 87 255 8300
This announcement does not constitute an offer or an invitation to offer to
purchase or subscribe for any securities.
The directors of Ryanair accept responsibility for the information contained in
this announcement. To the best of the knowledge and belief of the directors of
Ryanair (who have taken all reasonable care to ensure that such is the case),
the information contained in this announcement for which they accept
responsibility is in accordance with the facts and does not omit anything likely
to affect the import of such information.
Any person who is the holder of 1 per cent. or more of any class of shares in
Aer Lingus or Ryanair may be required to make disclosures pursuant to Rule 8.3
of the Irish Takeover Panel Act, 1997, Takeover Rules 2001 to 2005, as applied,
with amendments by the European Communities (Takeover Bids (Directive 2004/25/
EC)) Regulations 2006.
Davy Corporate Finance, which is regulated in Ireland by the Financial
Regulator, is acting exclusively for Ryanair and no one else in connection with
the Offer and Further Offer, and will not be responsible to anyone other than
Ryanair for providing the protections afforded to clients of Davy Corporate
Finance nor for providing advice in relation to the Offer or Further Offer, the
contents of this document or any transaction or arrangement referred to in this
announcement.
Morgan Stanley & Co. Limited is acting exclusively for Ryanair and no one else
in connection with the Offer and Further Offer and will not be responsible to
anyone other than Ryanair for providing the protections afforded to clients of
Morgan Stanley & Co. Limited nor for providing advice in relation to the Offer
or Further Offer, the contents of this document or any transaction or
arrangement referred to in this announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
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