Ryanair ordered to cut stake in rival airline Aer Lingus

Ryanair's stake in rival carrier Aer Lingus is under scrutiny after a U.K. commission determined that competition in the industry is at risk.

The U.K. Competition Commission (UKCC) has demanded that budget airline Ryanair reduces its stake in rival carrier Aer Lingus in order to maintain competition on routes between the United Kingdom and Ireland.

The commission investigates whether mergers, acquisitions and stakeholding could "lead to a substantial lessening of competition" in U.K. markets. If this prospect exists, then the UKCC can refer the case to the U.K. Office of Fair Trading (OFT) or the Secretary of State.

Following an investigation, the UKCC has ordered Ryanair -- well-known due to its cheap European plane tickets and revenue generation through add-on fees -- to reduce its stake in rival carrier Aer Lingus from 29.8 percent to 5 percent.

The commission says that possessing such a large stake in the Irish airline could lessen competition across U.K. and Irish routes. Ryanair's CEO, Michael O'Leary, said that the UKCC's final report is "bizarre and manifestly wrong but also entirely expected."

Aer Lingus chairman Colm Barrington commented:

"It was unacceptable that our principal competitor was allowed to remain on our share register with a shareholding of 29.8 percent and interfere with our business despite the European Commission blocking both Ryanair's first hostile takeover attempt six years ago and its most recent hostile takeover attempt earlier this year."

Ryanair will appeal the decision by filing with the U.K. Competition Appeal Tribunal in the coming weeks. This case is not the only recent media spotlight generated by the carrier, as a recent documentary conducted by Channel 4 accused the carrier of ignoring safety measures in the quest to reduce operational costs.

Via: BBC

Image credit: Ryanair

This post was originally published on Smartplanet.com

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