Ryanair's €748 million (£670 million) bid for Aer Lingus looks increasingly unlikely to succeed after it emerged that Aer Lingus was seeking a white knight and that the Irish Takeover Panel had criticised elements of the bid.

The chairman of Aer Lingus pleaded yesterday for another investor to keep the airline out of Ryanair's clutches. Colm Barrington, formerly of Ryanair, told The Irish Times that he was looking for an alternative investor to take a majority stake in the airline and fight off Ryanair's bid.

He said: “If they don't get us this time around, they won't get us again because I am not going to stay as chairman for three years and have this hanging over me.”

Mr Barrington mentioned Air France/KLM as a potential partner, and “a better option than Ryanair”.

The Irish Takeover Panel rejected several proposals intended to sweeten Ryanair's bid in the eyes of the Irish Government, which owns a quarter of of the shares in Aer Lingus. The Takeover Panel has banned Ryanair's promises to give the Irish Government control over Aer Lingus's landing slots at Heathrow, provide bank guarantees to cut fares and abolish fuel surcharges at the airline, on the grounds that they favour the Irish Government.

The panel also said that Ryanair could not make pledges to recognise trade unions at Aer Lingus and restore flights between Shannon and Heathrow unless it could clarify to whom the pledges were made and that they satisfied takeover rules.

Morgan Stanley and Davy Corporate Finance, financial advisers to Ryanair, said in a statement last night that they strongly disagreed with the Takeover Panel's ruling. “Ryanair intends to proceed with the proposed offer, including the delivery of these benefits and guarantees in a form consistent with the constraints imposed by the Irish Takeover Panel,” the statement added.

Ryanair's previous bid was rejected by the European Commission because buying Aer Lingus would give the budget airline a near-monopoly on flights from Dublin to the Continent.

The present bid, worth about half its previous offer, has been dismissed by the board of Aer Lingus as under-valuing the business.

Ryanair shares closed down 3.8 per cent at €2.92 in Dublin.

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