AER LINGUS yesterday formally rebuffed Ryanair's recent €748 million cash offer for the company.

At the launch of its defence document, Aer Lingus chairman Colm Barrington described Ryanair's €1.40-a-share offer as a "rip-off" for "our shareholders".

The airline highlighted its net cash balances of €801 million; a fleet worth €601 million, net of debt; and the value of its brand and its Heathrow slots.

If successful, Ryanair would pay €525 million to acquire the 70.2 per cent of shares in Aer Lingus it does not already own.

"We cannot allow Ryanair to take Aer Lingus's superior brand and customer proposition at a price that fundamentally undervalues our business," Mr Barrington said in a letter to shareholders.

When asked yesterday if a higher bid from Ryanair might be supported by the Aer Lingus board, chief executive Dermot Mannion said bluntly: "Aer Lingus is not for sale."

Mr Barrington said Ryanair's first bid for Aer Lingus in 2006 was "fatally flawed" in terms of the "anti-competitive nature of the combined entity", which led to the European Commission blocking the proposed deal.

"The board [of Aer Lingus] sees no reason why the commission would change its mind now," he added.

Mr Mannion said Aer Lingus would post a "small" pretax, pre-exceptional costs profit for 2008 and projected that it would return a surplus next year as well.

He declined to put a figure on the cost to Aer Lingus of the recently agreed cost restructuring plan with staff but said the plan would generate staff cost savings of €50 million a year.

The Aer Lingus chief urged shareholders to "ignore a lot of the baloney" from Ryanair in relation to other European airline mergers.

"In truth there have been no meaningful airline mergers in Europe in the past five years," he added.

With its defence document now published, Mr Barrington said he would be contacting all shareholders to seek meetings to discuss Ryanair's offer. These will include Ryanair chairman David Bonderman, who recently requested a meeting with Mr Barrington.

In response, Ryanair said Aer Lingus's document could not be "trusted".

"The reality is that Aer Lingus has incurred substantial - as yet undisclosed - exceptional costs, and companies have to pay tax, so the result will be another year of substantial net losses," he said.

Aer Lingus also announced the resumption of flights from Shannon to London Heathrow from March 29th. The service was axed 12 months ago.

Aer Lingus has moved two Heathrow slots from Dublin and will offer a twice daily return service from Shannon to London.

Mr Mannion said no new jobs would be created by the restoration of the route. "Crewing will be done out of Dublin," he explained.

Mr Mannion said he expects the route to "be profitable by the end of the first year".

Aer Lingus's share price fell by 2.9 per cent yesterday to €1.475.