Why Ryanair thinks it finally has Aer Lingus in its grasp

Ryanair has held out fresh concessions to win approval to take over Aer Lingus, offering to move some of its rival’s planes to continental Europe to operate non-Irish routes and allay concerns about a near monopoly in the domestic market.

Europe’s biggest budget carrier said it would also scrap some of its own routes from Ireland to persuade anti-monopoly regulators to reverse course after rejecting an earlier merger.

The European Commission is to rule by January on Ryanair’s €700m bid, seen as a long shot by analysts and investors who point to Aer Lingus’s shares trading well below the bid price.

Ryanair had an initial bid turned down by the European Commission in 2007 and dropped a second offer in 2009.

Ryanair, which already owns 30 percent of Aer Lingus, has offered 1.30 euros per share for the remaining stock, which traded at 1.09 euros on Thursday afternoon.

Ryanair has said it will submit a remedies package that will include commitments by rival airlines to operate some of the 36 routes on which it and Aer Lingus have no competitors.

“The way we can get across the line is by cutting a certain number of Aer Lingus routes, cutting a certain amount of Ryanair routes and then maybe refocus Aer Lingus,” Ryanair spokesman Stephen McNamara told a news conference on Thursday.

“Instead of having a Belfast base, and a Gatwick base, they should have a Brussels base” to serve non-Irish routes, he said of Aer Lingus.

Aer Lingus, which only operates from Ireland and Northern Ireland, could then compete with Brussels Airlines out of Brussels National airport and possibly with easyJet in destinations like Amsterdam.

Ryanair has spoken to around 10 airlines and charter operators. including Virgin, British Airways and Citijet, about taking over routes, McNamara said.

“I’m not sure of the 10 if they have all said they would be interested, but there is certainly enough interest to form the remedies package,” he said.

Ryanair chief executive Michael O’Leary met Willie Walsh, the head of British Airways’s parent IAG, during the past three months to discuss the remedies package, he said.

If the takeover succeeds, Ryanair would maintain Aer Lingus’ branding and position it midway between easyJet and Ryanair, cutting the average fare to 65 euros from 85 euros at present, compared with 45 euros at Ryanair, McNamara said.

It would revamp business class service on transatlantic routes and cut off-season economy ticket prices.