Ryanair dangles government €200m carrot

Ryanair is offering a €200m carrot to the Irish government in its bid to buy Aer Lingus. The move comes in the same week as the low-cost carrier sensed the government was warming to the prospect of a take-over, with finance minister Brian Lenihan saying the renewed takeover would be considered “carefully”.

Ryanair said it would provide €100m to guarantee that it would cut Aer Lingus’ average short-haul fares of €94 by at least 5 per cent for the next three years, saving passengers €40m a year.

It would also give an additional €100m guarantee that it would stop fuel surcharges within 28 days of the offer being completed, saving passengers a further €100m. Both guarantees would be independently audited.

Howard Millar, Ryanair’s deputy chief executive, said the proposals were delivered to the Irish transport minister yesterday. He is quoted in The Guardian saying: “The Irish government is in listening mode. It is under considerable financial pressure and it is looking at ways to raise cash.”

The government owns 25% of Aer Lingus and has previously strictly opposed Ryanair’s take-over attempts.


However, following this year’s aviation meltdown its stance appears to be softening as a matter of necessity. European regulators are also adopting a more flexible stance towards mergers in the face of the global recession.

Aer Lingus has seen its profits plummet and is planning to cut up to 1,500 jobs through redundancy and outsourcing as part of a 74 million euro cost-saving programme.