Just About Everyone, Including Ryanair, Trying to Buy Aer Lingus
June 25, 2012 at 2:51 PM
Gather around children, as we spin a fable about the magic that is European airline industry regulation. In early 2011, the European Union was in the midst of an airline merger blocking spree. Regulators rejected a proposed merger between Olympic Air and Aegean Airlines because they declared it would leave the resulting airline dominating the Greek market. Then Olympic went out of business because it was unsustainablehence the need for the merger in the first placeputting a lot of people out of work and leaving Aegean dominating the Greek market anyway. The End.
It bears mentioning that around the time when regulators were putting Olympic on a path to insolvency, they also rejected an attempted takeover of Aer Lingus by Ryanair. Now Ryanair is trying again and forecasters predictperhaps in light of the Olympic fiasco or perhaps because of the challenging economy or perhaps simply a function of the changing industrythat its odds "of clearing competition hurdles...have improved."
Ryanair had already tried to take over Aer Lingus twice and been slapped down both times. The justifiably hated Irish LCC already owns around one-third of its competitor and has long tried to dictate its business practices. Maybe the third time will be the charm.
Competing with Ryanair is Turkish Airlines, which reportedly has its eye on the Irish government's 25% stake in Ireland's former national airline. And competing with both of them is Etihad, which already owns a tiny share of Aer Lingus and made something of a stab at acquiring majority control last March.
If everyone else fails and Ryanair wins, its customer-denigrating chief, Michael O'Leary, has floated the idea of flying ultra-cheap trans-Atlantic flights on Aer Lingus's routes. Guaranteed long-haul misery? It would be like the experiment that Heath Ledger's Joker pulls at the end of The Dark Knight: is humanity decent enough to resist the temptation of collective abasement in exchange for individual gain?
With Ryanair posting record profits and rewarding shareholders, we're not hopeful.
[Photo: Trainler / Wiki Commons]