Ryanair proposes €100m Flybe deal

Ryanair has offered to give British airline Flybe €100 million in cash to help establish an operation in Ireland that could take…

Ryanair has offered to give British airline Flybe €100 million in cash to help establish an operation in Ireland that could take over 43 routes from Aer Lingus as it seeks to gain approval from the European Commission to acquire its Irish rival.

The routes in question are expected to generate a profit of €20 million for Flybe, according to Ryanair’s submission.

Ryanair has also withdrawn a proposal that British Airways would take over Aer Lingus’s Heathrow slots.

Instead, BA has agreed to take over Ryanair and Aer Lingus Gatwick slots for flights to Dublin, Cork and Shannon.This is an important change to the remedies package submitted to the commission.

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Government veto

At present, the Government, which owns 25.11 per cent of Aer Lingus, could veto a transfer of the Heathrow slots to British Airways if it were to gain the support of another 5 per cent of shareholders in the former state-owned airline.

This is likely given that Aer Lingus’s code-sharing partner Etihad Airways owns just under 3 per cent of the Irish airline and that pilots and other staff also have significant holdings in the business and are unlikely to sell to Ryanair.

The Gatwick solution now offers an alternative remedy to the commission. BA would retain an option to take over the Heathrow slots in the event that Ryanair gains more than 75 per cent control of Aer Lingus at some point.

The commission is expected to market-test Ryanair’s latest remedies this week. It has set March 6th as the deadline for its decision on the takeover proposal.

Ciarán Hancock

Ciarán Hancock

Ciarán Hancock is Business Editor of The Irish Times