David Robertson: Analysis
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When Michael O’Leary made a bid for Aer Lingus two weeks after the Irish flag carrier was privatised in 2006, many analysts thought that he was simply making mischief.
The competition issues raised by the merger of Ireland’s two main airlines, along with resistance from employee and government shareholders, made a successful bid unlikely.
However, Mr O’Leary pressed on and eventually accumulated a 29.8 per cent holding in Aer Lingus. The bid was duly knocked back by European regulators but that did not dim Mr O’Leary’s interest.
He began suggesting several months ago that the harsh competitive environment for airlines might make Brussels more open to the deal. Again, it appeared that Mr O’Leary was making mischief but the commitments made by Ryanair yesterday demonstrate that Mr O’Leary is very serious in his attempt to gain control of Aer Lingus and he is throwing everything into his second tilt.
He is not known for compromise and the pledges he made are a clear attempt to win the public, political and work-force support that will be needed before a showdown in Brussels.
What is still unclear is just why Mr O’Leary is so desperate to gain control of Aer Lingus. Ryanair is lean and mean while Aer Lingus is struggling and burdened with the baggage that comes with being a former state-owned carrier.
Rather than trying to win over Aer Lingus’s shareholders, Mr O’Leary needs to explain to his investors why he is bothering.
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