Alexa

Aer Lingus rejects demand by Ryanair, its No. 1 shareholder, for extraordinary general meeting

Aer Lingus rejects demand by Ryanair, its No. 1 shareholder, for extraordinary general meeting

Aer Lingus Group PLC rejected a demand Friday by its top shareholder, rival airline Ryanair, to hold an extraordinary general meeting on the grounds that Ryanair was seeking to manipulate a competitor's business plans for its own benefit.
Aer Lingus managers had been under pressure to accede to Ryanair, which holds 29.4 percent of Aer Lingus stock.
But in a two-page letter, Aer Lingus told Ryanair its motives were selfish and its efforts to influence Aer Lingus policies would, if permitted, violate a June ruling by European Commission competition authorities barring Ryanair's attempt to take over its major Irish competitor.
"We have carefully considered your request, but ... we are not prepared to accede to it," the letter said.
"Ryanair is attempting to influence and coordinate the strategic conduct of Aer Lingus, its closest competitor, in circumvention of the (European) Commission's recent prohibition decision and in clear breach of Irish and European competition law," it said.
Aer Lingus Chairman John Sharman accused Ryanair of "seeking to circumvent (the EU) decision by exerting influence on Aer Lingus through its minority shareholding."
Ryanair declined to respond. A spokeswoman, Pauline McAlester, said the airline had not yet received the rejection letter officially.
The Friday night announcement appeared timed to catch Ryanair off guard. On Thursday, Aer Lingus Chief Executive Dermot Mannion had specified in interviews that his company would not announce a verdict until Tuesday.
Irish airline analysts expect Ryanair to mount its own extraordinary meeting anyway, which is its right under Irish corporate law. Any shareholder with a minimum 10 percent stake can call such a gathering to see who else turns up. Ryanair's hope would be to win backing from Aer Lingus employee-controlled trusts that represent about 22 percent of shares.
Ryanair had demanded the meeting Aug. 13 in hopes that a majority of shareholders would vote to reverse Aer Lingus' surprise decision to withdraw key services from Shannon, the major airport in western Ireland, in favor of a new hub in the Northern Ireland capital, Belfast.
Ryanair Chief Executive Michael O'Leary said he wanted Aer Lingus to keep its current services linking Shannon with Heathrow, the major London airport, and to make its planned Belfast services link to London's No. 2 airport, Gatwick, instead.
O'Leary suggested that Aer Lingus could do this by canceling a planned Dublin-Gatwick service _ the same route operated by Ryanair, which does not use Heathrow.
Aer Lingus accused Ryanair of seeking to minimize direct competition between Ryanair and Aer Lingus on routes to London.
Analysts agreed that the Ryanair move appeared designed to embarrass the government of Prime Minister Bertie Ahern, which retained a 25 percent stake in Aer Lingus after floating the previously state-owned airline on the Irish and British stock exchanges in September 2006.
The government has opposed Ryanair's hostile takeover bid, arguing that Europe's no-frills leader would be likely to cut Aer Lingus routes of economic importance _ and citing the Shannon-Heathrow link as a likely example.
But after Aer Lingus stunned the west of Ireland by announcing its plans to cut the service in favor of Belfast, the government has insisted its shareholding does not permit it to interfere in the airline's decision. This has raised widespread questions as to why the government has kept any holding at all.
Any majority vote at an extraordinary general meeting of Aer Lingus shareholders calling on the management to reverse its Shannon-Heathrow decision would not be legally binding.
An Aer Lingus-sanctioned meeting, however, would have required the government to take a side _ and exposed it to heavy criticism from business and tourism leaders in the west of Ireland if it did not vote against the Aer Lingus plans.
The government would not be under as much political pressure to participate in a Ryanair-driven meeting. However, Ryanair could still benefit by building common cause with the employee shareholders, who are key targets in any renewed Ryanair takeover push. Labor unions at Aer Lingus oppose the airline's plan to switch services to Belfast.


Updated : 2021-02-28 02:54 GMT+08:00