Ryanair Appeals EC decision
Ryanair Holdings PLC
10 September 2007
RYANAIR APPEALS COMMISSION'S UNLAWFUL AND POLITICALLY MOTIVATED DECISION
PROHIBITING AER LINGUS MERGER
Ryanair, Europe's largest low fares airline, today (Monday, 10th September 2007)
confirmed that it has submitted its appeal to the European Court of First
Instance (CFI) in Luxembourg against the EU Commission's unlawful and
politically motivated decision to prohibit its merger with Aer Lingus. Ryanair
had made an offer of €2.80 per share to acquire Aer Lingus following the former
national airline's floatation last October. Ryanair was required to seek
approval for clearance of the deal from the European Commission. However,
following an 8-month investigation, the Commission blocked the merger following
pressure from the Irish Government and Aer Lingus. As a result, Aer Lingus
shareholders have suffered a 58% collapse in their interim profits, and a share
price fall to €2.50.
The merger between Ryanair and Aer Lingus would have:
1. Immediately reduced Aer Lingus fares and eliminated Aer Lingus' unfair fuel
surcharges, saving consumers over €100m. p.a.;
2. Retained Aer Lingus as a separate brand and continued to operate the two
airlines separately, thus giving passengers a choice of services;
3. Retained all of Aer Lingus' profitable routes, including Shannon-Heathrow,
which Aer Lingus subsequently abandoned;
4. Reduced Aer Lingus' costs and improved its efficiency; and
5. Improved Aer Lingus' service and punctuality.
Ryanair is confident that the CFI will overturn this decision because:
1. This is the first airline merger that was actively opposed by a national
Government (on narrow political grounds). The Irish Government has now
admitted that they retained their 'strategic' shareholding in Aer Lingus to
block a hostile takeover 'like Ryanair's bid'.
2. This is the first time that the Commission has prohibited a merger between
two companies which combined will have less than 5% of the EU market.
3. This is the first time that the Commission has prohibited an airline merger
and reverses a 20-year policy of encouraging EU airline mergers, having
previously approved the larger Air France/KLM and Lufthansa/Austrian/Swiss
mergers.
4. This is the first time that an EU airline merger offered guaranteed fare
reductions (and fuel surcharge elimination) of over €100m. p.a. for the
benefit of European consumers.
5. This prohibition leaves Aer Lingus exposed as a small, peripheral regional
airline, which cannot compete with Ryanair on price or punctuality from
Dublin (it has recently pulled off another 5 Ryanair routes from Dublin and
also announced the closure of its Shannon-Heathrow route) at a time when the
rest of the European industry is consolidating. Aer Lingus' recent interim
results saw a 58% decline in Aer Lingus' profits, despite an average short
haul fare of over €90 (more than double Ryanair's average fare of €41).
Speaking today in Dublin, Ryanair's Head of Regulatory Affairs, Jim Callaghan,
said:
'We have filed our appeal with the CFI today asking them to overturn the
Commission's unlawful and politically motivated decision to block
Ryanair's merger with Aer Lingus. This merger, which accounts for less
than 5% of the EU air transport market, was clearly pro-competition and
would have been the first merger in history to guarantee fare
reductions, which would have saved European consumers more then €100m.
p.a. The Commission made several manifest errors in its assessment of
the merger and ignored evidence from Ryanair demonstrating the numerous
benefits that the merger would bring to consumers and increased
competition with the high fares Mega Carriers. At the same time, the
Commission accepted, without question, misleading and factually
inaccurate submissions from the Irish Government and Aer Lingus, both of
whom were clearly trying to block the merger.
'Ryanair also offered unprecedented commitments to the Commission to
address any possible competition concerns, including giving up more than
half of Aer Lingus' Dublin-Heathrow slots, as well as over 1,700
additional weekly slots - several times what has been offered in any
previous airline merger. However, the Commission refused these
commitments, preferring instead to block this pro-consumer,
pro-competition merger for narrow political reasons.
'The Commission's prohibition of the merger has denied European
consumers of these benefits and further protects the growing Mega
Carriers like BA/Iberia/oneworld; Air France/KLM/Skyteam; and Lufthansa/
SAS/bmi/Star Alliance from a stronger, more competitive Ryanair/Aer
Lingus group. It has also seen Aer Lingus shareholders lose over €150m.
as the share price has fallen to €2.50, considerably lower than
Ryanair's offer last October.
'We are confident that the CFI will overturn this decision in the
interests of consumers and the competitiveness of the industry. As
always with the European Commission, there seems to be one rule for the
national Mega Carriers and a completely different one for Ryanair'.
Ends. Monday, 10th September 2007
For reference: Peter Sherrard - Ryanair Pauline McAlester - Murray Consultants
Tel: +353-1-8121228 Tel: +353-1-4980300
This information is provided by RNS
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