21st Dec 2006 07:00
Ryanair Holdings PLC20 December 2006 RYANAIR REGRETS EUROPEAN COMMISSION DECISION TO REFER AER LINGUS TAKEOVER OFFER TO PHASE TWO BUT IS CONFIDENT THAT CONSUMERS AND COMPETITION WILL WIN IN THE END Ryanair today (Wednesday, 20th December 2006) expressed its disappointment atthe European Commission's decision to refer its offer for Aer Lingus to a PhaseII investigation. This further investigation could take between three to fivemonths, and Ryanair regrets this unnecessary delay and any uncertainty it maycause for Aer Lingus shareholders and consumers who want access to lower faresand better service. Responding to the European Commission's announcement today, Ryanair's CEO,Michael O'Leary, said: "We are disappointed with the delay in the European Commission's approval ofRyanair's offer for Aer Lingus. This could and should have been decided in PhaseI. We believe that this delay is unnecessary, for the following reasons: 1. Ryanair does not accept the Commission's claim that it did not have sufficient time to consider our proposed remedies. The Commission were able to market test Ryanair's first set of proposed remedies within a five working day period (Thur 30th Nov to Wed 6th Dec). The final list of remedies was submitted to the Commission, at its request, five working days (Thur 14th Dec to Wed 20th Dec) prior to the end of the Phase I deadline, allowing a similar period of time for consideration and market testing. We do not believe it is reasonable for the Commission to claim, that it did not have sufficient time to market test these remedies. 2. Ryanair is aware that in previous airline consolidations the final remedies were still being tested and negotiated between the airlines and the European Commission the night before the decision was due. This was particularly so in the case of the Air France-KLM merger. 3. This decision to refer the Ryanair-Aer Lingus takeover to a Phase II investigation flies in the face of the European Commission's stated policy of encouraging consolidation amongst European airlines. Given that much larger airline consolidations (most recently the Air France-KLM merger) have been approved under the Phase I process, it is difficult to understand the Commission's failure to follow its own stated strategy of promoting airline consolidation by granting Phase I approval in this case. 4. The Commission's decision in this case is inconsistent given that the Air France-KLM merger was approved in Phase I while offering up just over 120 slots at its main airports. By contrast, Ryanair offered to surrender over four times more slots (over 500) of the combined Ryanair/ Aer Lingus slots, including valuable slots at London Heathrow, in order to secure Phase I approval, yet the Commission has failed to follow its own consolidation policy or the precedents set in the approved Air France-KLM merger. 5. The Commission's inconsistency in giving Phase I approval for the Air France-KLM merger, which controlled 62% of the movements at Paris Charles de Gaulle Airport, contrasts markedly with its failure to give Phase I approval to the Ryanair-Aer Lingus deal which would, if successful, have less (just 61%) of the movements at Dublin Airport. The Commission appears to be applying different and totally inconsistent principles to the Ryanair-Aer Lingus deal than it applied to the much larger Air France-KLM deal, which was waved through with little difficulty in Phase I. 6. The commitments made by Ryanair in connection with this takeover, which include, reducing Aer Lingus fares and fuel surcharges, maintaining Aer Lingus as a separate stand alone airline and retaining its brand, make this transaction a pro-competition, pro-consumer consolidation. Given Ryanair's commitment to reduce Aer Lingus' short-haul fares by almost 10% over four years, there is no basis for the Commission's claim that the proposed acquisition "could give rise to higher fares than would be likely if the two carriers remained separate". The fact that Aer Lingus' fares will fall under Ryanair's ownership would make this consolidation far more consumer friendly than the phase I approved Air France-KLM merger which has resulted in average fares and yields rising significantly in the eighteen months since that merger. "Nevertheless, Ryanair recognises the European Commission's right to refer thistransaction to a Phase II investigation. This longer time period will, webelieve, allow the Commission to fully market test both the transaction and therevised remedies, which Ryanair will propose. Ryanair remains confident that itsoffer for Aer Lingus - which is consistent with the Competition Commission'sstated policy on airline consolidation - will win EU competition approval underthe Phase II procedure. "We will continue to work closely with the European Commission to assist them intheir review of this transaction, which is in line with the EuropeanCommission's stated aim of encouraging consolidation amongst European airlines.This merger also provides Aer Lingus with a secure long term future as part ofone strong Irish airline group, whereas, on its own, we believe it is doomed toa bleak future as a small, regional, high cost airline which recorded dismalfinancial results (including operating losses) in the first half of 2006, andwhose reported load factors have declined significantly in recent months. "Ryanair remains committed to acquiring Aer Lingus and will continue thisprocess to - what we believe will be - the successful conclusion of this PhaseII investigation". Ends. Wednesday, 20th December 2006 Enquiries:Ryanair Telephone: +353 1 812 1212Howard Millar Davy Corporate Finance Telephone: +353 1 679 6363(Financial Adviser to Ryanair) Hugh McCutcheon Eugenee Mulhern Morgan Stanley Telephone: +44 20 74255000(Financial Adviser to Ryanair) Gavin MacDonald Colm Donlon Adrian Doyle Murray Consultants Telephone: +353 1 498 0300(Public Relations Advisers to Ryanair) Pauline McAlester Telephone: +353 87 255 8300 This announcement does not constitute an offer or an invitation to offer topurchase or subscribe for any securities. The directors of Ryanair accept responsibility for the information contained inthis announcement. To the best of the knowledge and belief of the directors ofRyanair (who have taken all reasonable care to ensure that such is the case),the information contained in this announcement for which they acceptresponsibility is in accordance with the facts and does not omit anything likelyto affect the import of such information. Any person who is the holder of 1 per cent. or more of any class of shares inAer Lingus or Ryanair may be required to make disclosures pursuant to Rule 8.3of the Irish Takeover Panel Act, 1997, Takeover Rules 2001 to 2005, as applied,with amendments by the European Communities (Takeover Bids (Directive 2004/25/EC)) Regulations 2006. Davy Corporate Finance, which is regulated in Ireland by the FinancialRegulator, is acting exclusively for Ryanair and no one else in connection withthe Offer and Further Offer, and will not be responsible to anyone other thanRyanair for providing the protections afforded to clients of Davy CorporateFinance nor for providing advice in relation to the Offer or Further Offer, thecontents of this document or any transaction or arrangement referred to in thisannouncement. Morgan Stanley & Co. Limited is acting exclusively for Ryanair and no one elsein connection with the Offer and Further Offer and will not be responsible toanyone other than Ryanair for providing the protections afforded to clients ofMorgan Stanley & Co. Limited nor for providing advice in relation to the Offeror Further Offer, the contents of this document or any transaction orarrangement referred to in this announcement. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
RYA.L