Aer Lingus Knuckles Down Over Ryanair Offer

Aer Lingus is fortifying its defences against the bold approach from Ryanair last week.

The airline's Chief Executive Dermot Mannion has announced the recent union agreement will mean the loss predicted for the end of year could be turned around due to its expected €50 million in cuts.

The Aer Lingus boss welcomed the outcome of the recent SIPTU ballot, which he said would provide significant cost savings, work practice changes and pay inflation moderation for the airline. Mr Mannion said: "Crucially, this transformational programme of change will provide an excellent platform for growth at each base in the future."

Following the union agreement, shares in Aer Lingus climbed to €1.58, in contrast to the Ryanair takeover bid valuation of just €1.40 per share.

Ryanair's previous takeover proposal in 2006 was rejected by the European Commission over its damage to competition, however, the company claims its current offer would not breach competition regulations.

A spokesman for Ryanair said: "In this announcement Ryanair outlines some of the details of its proposals in order to demonstrate how the Offer promotes and secures competition and how it will promote national aviation policy and perceived Irish Government concerns in that regard."

The airline announced it would restore Shannon-Heathrow connectivity, give the government control over London-Heathrow slots, and provide a €100 million bank guarantee that it would reduce Aer Lingus' short haul fares by 5% and eliminate the airlines fuel surcharge.

However, rebutting the new offer, a spokesman for Ryanair said: "Following a thorough review, the European Commission prohibited Ryanair's takeover of Aer Lingus on 27th June 2007.

"Ryanair is now appealing the European Commission prohibition. Consequently, this new lower offer is not capable of completion.

"Aer Lingus remains a strong business with significant cash reserves and a robust long term future. The Board believes that the Offer significantly undervalues Aer Lingus."


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