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Aer Lingus rebuffs Ryanair’s advances

Ashley Milne-Tyte Oct 5, 2006

BOB MOON: In a surprise role-reversal, Europe’s biggest low-cost carrier, Ryanair, launched a bid today for the Irish national airline Aer Lingus. That would be something like Southwest or JetBlue making an offer for United or Delta.

Ryanair is famous for its rock-bottom prices on a slew of short-haul European routes. It’s also well-known for its colorful CEO, Michael O’Leary. He’s been known to sass back to those who complain about his service that, if they want more frills, they can take another airline. And now he’s hoping to bring his low-cost, minimalist approach to long-haul routes.

But he faces a few hurdles, as Ashley Milne-Tyte reports.

ASHLEY MILNE-TYTE: Aer Lingus may be the official national airline but Ryanair now carries more passengers out of Ireland each year. Ryanair CEO Michael O’Leary spoke about his hopes for the deal at a Dublin airport today.

MICHAEL O’LEARY:“I think it gives Ireland a strong competitor by combining Ryanair and Aer Lingus with, you know, the big mega-carriers — the Air France Group, the British Airways group, the Lufthansa group — and puts the Irish airline industry on the world stage, capable of competing with the best of European and world airlines.”

But Aer Lingus has announced it’s rejecting the bid, which it says undervalues the airline’s growth potential. And the Irish government, which owns a 28 percent stake in Aer Lingus, says a deal would be bad for competition. But O’Leary is nothing if not determined. Julius Maldutis of Aviation Dynamics says O’Leary would manage the joint company well.

JULIUS MALDUTIS:“Given his success rate with Ryanair, I think that’s why he will succeed in this combination. Because of that personality and that character.”

Still, Aram Gesar of Airguide Magazine says that character could ruffle some feathers at a traditional airline like Aer Lingus and with European regulators, for whom O’Leary has voiced disdain.

ARAM GESAR:“That could be one of the stumbling blocks is his, um, lack of diplomacy. Which you badly need when you’re dealing with government and unions because it’s all about the human factor, etcetera. Whereas he’s perceived as a numbers-only player.”

If the deal goes through, Gesar says, it could be a nightmare for competitor British Airways. The new partnership would be the first low-cost carrier to fly a long-haul route out of London.

In New York, I’m Ashley Milne-Tyte for Marketplace.

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