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Britain tells Ryanair to cut its Aer Lingus stake

Britain tells Ryanair to cut its Aer Lingus stake
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There has been yet another twist in the Ryanair/Aer Lingus saga.

Britain’s competition regulator has now ordered the low-cost carrier to sell most of its stake in its Irish rival.

London believes it has jurisdiction over the two Irish airlines because they compete on 11 routes between Ireland and Britain.

Ryanair’s stake could lead to “a substantial lessening of competition” on some routes it said.

The UK competition watchdog wants Ryanair to cut its stake in Aer Lingus from 30 percent to five percent and not seek additional shares or places on the board.

It concluded the current ownership structure could limit Aer Lingus’s ability to manage effectively its portfolio of slots at London’s Heathrow Airport and could impede Aer Lingus from combining with another airline.

While the two companies currently impose a “strong competitive constraint” on each other, the report found that Ryanair would have the incentive to use its influence to weaken Aer Lingus’s effectiveness as a competitor.

‘Bizarre and wrong’

The order could be a death blow to plans by Ryanair’s outspoken Chief Executive Michael O’Leary to take over Aer Lingus.

O’Leary plans to appeal against the move, which he called “bizarre and manifestly wrong”.

He has already had three takeover attempts blocked by the European Commission on competition grounds.

Ryanair said the UK Competition Commission could not lawfully impose any remedies on it until the completion of its appeal against the latest European Commission ruling.

O’Leary built up a 30 percent stake in Aer Lingus between 2007 and 2009 as a platform to take over the former flag carrier.