After the Irish government again rejected the Ryanair bid for Aer Lingus, the low-cost carrier announced that it would drop its bid for the Irish flag carrier. The stock of Aer Lingus immediately dropped to beneath the Ryanair offer price.
Ironically, the airline that thrived in a non-competitive environment prior to the arrival of Ryanair and EasyJet, saw the deal fail because the government wanted more competition. “Competition was a major consideration,” Minister for Transport Noel Dempsey said in a statement.
Strangely, the Irish government does not seem interested in maintaining a strong national airline that the Ryanair/Aer Lingus link-up would create. It seems that the Irish government just can’t swallow its pride and agree to a takeover by the profitable scruffy upstart Ryanair.
Employees hold a 14 percent stake in Aer Lingus. Their stock value has plummeted as each of the Ryanair overtures was rejected. The first offer for Aer Lingus was twice as high as the latest and now the stock price is already more than 10 percent lower than the latest Ryanair offer.
It will not take long for BA, Air France/KLM and Lufthansa to start sniffing around, if they haven’t done so already. But don’t expect another offer as high as Ryanair’s €748 million (US$970 million) bid.
Aer Lingus will need to partner with someone to expand their network. They already have a deal with JetBlue that helps feed flights from JFK and the profitless Irish airline just announced a new codeshare with money-losing United Airlines on a flight from Washington Dulles to Madrid (go figure).
Charlie Leocha is the President of Travelers United. He has been working in Washington, DC, for the past 14 years with Congress, the Department of Transportation, and industry stakeholders on travel issues. He was the first consumer representative to the Advisory Committee for Aviation Consumer Protections appointed by the Secretary of Transportation from 2012 through 2018.
