For the past few weeks, the difficulties at Airbus have dominated commercial aviation news. Ryanair, known for its cheaps fares and no-frills policies, shocked the world airline industry this morning by announcing a takeover of Irish flag carrier Aer Lingus. This move marks the first time a low-cost carrier has sought to takeover a competitor with trans-Atlantic operations. Aer Lingus’ board rejected the offer, claiming that the $1.9 billion offer “undervalued the group’s business and long-term growth potential.” Ryanair CEO Michael O’Leary visited European news outlets this morning, praising the possible fusion of the two airlines as ” a unique opportunity to form one strong airline group for Ireland and for European consumers.” Initially, if the hostile takeover occurs, he said that the two carriers would maintain seperate entities under a common parent. A few commercial aviation analysts have noted the deal would tranform “Ryanair, with a market value of 6.7 billion euros and cash resources to fund the purchase of some 2 billion euros, from being a pure “no-frills” carrier investment to one with network carrier exposure.” The combination of Aer Lingus and Ryanair would benefit Aer Lingus’ international operations tremendously. Aer Lingus would gain instant access to 50 million passengers, most of whom funnel through Dublin, a major hub for both Aer Lingus and Ryanair. British Airways and other European carriers are the most affected by the proposed Irish synergy, as Aer Lingus will likely be converted into a more capable international competitor with the extra passenger feed. On news of the announcement, the Irish government, a twenty-eight percent shareholder in Aer Lingus, said that it would not sell its shares. Even though O’Leary has a history of criticizing the Irish government and Aer Lingus, O’Leary conceded that he would be content with having the government as a minority shareholder. Before approval, the deal must be investigated by the European Union. Industry insiders don’t expect any government interference, however.

Source: Reuters