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EU blocks Ryanair bid to buy Ireland's Aer Lingus

Published on NewsOK Modified: February 27, 2013 at 11:52 am •  Published: February 27, 2013

When Ryanair relaunched its takeover bid last year, it expressed hopes that Ireland would agree to sell its stake this time, given the fact that the debt-burdened government is seeking to sell billions in state assets as part of its effort to exit its 2010 international bailout. And Ryanair's detailed pitch to EU authorities included a framework agreement to sell key Aer Lingus routes to two British competitors, British Airways and Flybe.

Ryanair, which has surged ahead of Aer Lingus in Ireland with a larger work force and lower average fares, also promised to trim Aer Lingus ticket prices and increase employment while keeping Aer Lingus as a distinctive higher-service brand with trans-Atlantic routes. Ryanair operates only in Europe, Morocco and the Canary Islands.

"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," Kiely said.

The EU Commission has cleared other large airline mergers or takeovers, including the British Airways-Iberia and Lufthansa-Austrian Airlines deals. But Almunia told reporters that Ryanair's bid was different because the two airlines operate principally in the same market and are both based in Dublin. He compared the situation to a proposed merger between two Greece-based airlines, Olympic and Aegean, that the EU blocked in 2011.

Aer Lingus cheered the EU's decision.

"Aer Lingus' position from the outset has been that Ryanair's offer should never have been made," chief executive Christoph Mueller said in a statement.

The airline is suing Ryanair in an effort to force its rival to divest its 30 percent stake. Britain's competition watchdog also is investigating whether Ryanair's investment in Aer Lingus unfairly influences its competitor's decisions. Ryanair holds no seats on the Aer Lingus board.


AP writer Shawn Pogatchnik in Dublin contributed to this report.


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