David Robertson, Business Correspondent
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Michael O’Leary, the famously anti-trade union chief executive of Ryanair, has said that he will recognise Aer Lingus’s unions if he is allowed to buy the Irish flag carrier.
The promise is one of several that Ryanair, Europe’s largest airline by passenger numbers, made yesterday as it sought to win political and public support for its €748 million (£650 million) bid.
Ryanair’s other commitments include cutting Aer Lingus’s short-haul fares by 5 per cent, scrapping its fuel surcharge and giving control of landing slots at Heathrow to the Irish Government.
All these measures are aimed at defusing concern in the Republic of Ireland over potential job losses and a reduction in competition from the merger of the country’s two airlines.
Ryanair owns 29.8 per cent of Aer Lingus and has offered €1.40 a share to buy out the rest of the company. That is half what Mr O’Leary offered two years ago when he first made a bid for Aer Lingus, two weeks after the flag carrier had been privatised.
European competition regulators blocked that deal last year, but Ryanair believes that the spate of airline bankruptcies caused by the economic downturn has strengthened its position.
If Ryanair’s latest bid is to succeed it must win support from shareholders, including Aer Lingus’s employees. The flag carrier’s crew and pilots own about 18 per cent of the company and have expressed concern about job and pay cuts if they are acquired by the budget carrier.
Ryanair said yesterday that it would “honour and respect” Aer Lingus’s long-standing union agreements despite its own refusal to allow its staff to unionise.
Impact and Ialpa, two unions representing aviation workers, attempted to force Ryanair to recognise collective bargaining earlier this year but eventually dropped their High Court case against the budget carrier. Mr O’Leary said at the time that he would pursue the unions for legal costs of about €1 million. He has been a vociferous critic of unions, preferring to deal with his 6,000-strong workforce through employee councils.
Ryanair will also need to gain political support in the Irish Republic if its bid for Aer Lingus is to succeed. The Irish Government retained a 25 per cent stake in the carrier when it was privatised in order to ensure that strategically important routes such as Dublin to Heathrow were maintained.
Mr O’Leary said: “By giving water-tight control over Aer Lingus’s Heathrow slots, we effectively remove any need for the Irish Government to retain a strategic shareholding.”
Mr O’Leary met Noel Dempsey, the Irish Transport Minister, two days ago and the promises made by Ryanair are thought to have been a response to those talks. Ryanair has also agreed to restore Aer Lingus flights between Shannon, on the west coast of Ireland, and Heathrow.
The budget airline will provide a €100 million bank guarantee to prove its commitment to cutting Aer Lingus’s short-haul fares by 5 per cent. Another €100 million bank guarantee will be offered to cover the elimination of the flag carrier’s fuel surcharge.
Aer Lingus’s management has rejected Ryanair’s latest offer, which represents a 28 per cent premium to the prebid share price.
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