Ryanair wants to meet Aer Lingus shareholders after the Irish flag carrier's board rejected a new €750 million (£638 million) bid by its budget rival. Ryanair said that it was seeking meetings with the Irish Government and with other Aer Lingus shareholders.

Dublin has a 25.1 per cent stake in the loss-making Aer Lingus, which was privatised in 2006. The airline's employees hold 14.2 per cent. Ryanair owns 29.82 per cent of its rival and the rest is held by other investors, including 2.27 per cent by Denis O'Brien, the billionaire entrepreneur.

An Irish Transport Ministry spokesman said: “No request for a meeting to discuss the takeover bid has been received by the Department of Transport from Ryanair. We would expect that when Ryanair make their formal bid, which they have not yet done, they will request a meeting with us.”

Batt O'Keeffe, the Education and Science Minister, said that a merger of the two airlines “would not be in keeping with government policy”. A Finance Ministry spokesman said that no meeting had been scheduled with Brian Lenihan, the Finance Minister.

Aer Lingus's board rejected the fresh offer as “significantly” undervaluing the airline and it advised shareholders to take no action.

Ryanair made its all-cash offer at €1.40 a share, a 28 per cent premium over the average closing price for Aer Lingus shares in the 30 days to November 28. Its bid was half of what it offered in 2006, an approach that was rejected by the European Commission on the ground that it would create a near-monopoly in European flights out of Dublin. The two airlines account for about 90 per cent of all air traffic to and from Ireland.

Analysts said that a recent spate of airline mergers meant that the chances of success would be greater this time, even if a takeover would prove contentious in Ireland. Manus Cranny, analyst for MF Global Spreads in London, said that Michael O'Leary, Ryanair's chief executive, had timed the offer “incredibly” because of the Irish Government's desire to raise funds and growing fears at Aer Lingus of further job losses and erosion of benefits. He added that Mr O'Leary had frightened other Aer Lingus shareholders because of his reputation as an “absolutely aggressive businessman running a fierce company”.

Jim Power, chief economist at Friends First, said that an open mind was needed on the new offer. “We must not allow ideological blind spots or past enmities to get in the way of a proposal that could be in the best long-term interests of the Irish airline industry and of the Irish economy,” he wrote in the Irish Independent yesterday.

A Dublin trader said: “There seems to be appetite for Aer Lingus shares - this bid could have legs.”

Mr O'Leary said it was “no surprise” that Aer Lingus's board had rejected the offer, adding that the offer document would be published shortly.

Aer Lingus closed up 4 cents, or 3 per cent, at €1.32 in Dublin yesterday. Ryanair's shares were down 3 cents, or 1 per cent, at €2.76.

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