Ryanair expects EU to block Aer Lingus takeover bid

Budget airline Ryanair says it will go to court after European commission indicates it will reject Aer Lingus takeover bid

Ryanair expects its €694m (£560m) takeover of the Irish flag carrier Aer Lingus to be blocked by EU officials.

The budget airline said the European commission had indicated it would prohibit the takeover at a "state of play" meeting with commission officials in Brussels on Tuesday.

Ryanair said the commission's decision was "clearly a political one to meet the narrow, vested interests of the Irish government and is not based on competition law".

The airline, which was making its third attempt to buy Aer Lingus in six years, said it had no alternative but to appeal the decision through the courts.

"We expect to get a fair hearing at the European courts, as we haven't received one from EU competition commissioner JoaquĆ­n Almunia and his case team," Ryanair said in a statement.

Ryanair, which already owns 29.82% of Aer Lingus, said: "It appears clear from this meeting that no matter what remedies Ryanair offered, we were not going to get a fair hearing and were going to be prohibited regardless of competition rules.

"The EU commission intends to prohibit Ryanair's offer for Aer Lingus, despite the fact that Ryanair has met every competition concern raised in the EU's statement of objections and during the review process, including providing the EU – at its request – with irrevocable commitments from not one, but two, upfront buyers to eliminate all competitive overlaps between Ryanair and Aer Lingus."

Ryanair said BA's owner IAG had committed to "take over divestments of Ryanair's and Aer Lingus's entire London-Gatwick operations", while Flybe had agreed to take over 43 Aer Lingus UK and European routes.

Ryanair said it has "instructed its lawyers to appeal any prohibition decision to the European courts". The commission is expected to pronounce its formal decision on the takeover on 6 March. It declined to comment.

Michael O'Leary, Ryanair's chief executive, has said the proposed takeover would create "one strong Irish airline group" that would be able to compete with IAG, Air France and Lufthansa.

O'Leary said Aer Lingus had "failed to deliver value for shareholders" in the six years since Ryanair made its first takeover bid. He said Ryanair's offer was the "best way for Aer Lingus to continue to be owned, controlled and managed from Ireland for the benefit of Irish citizens and visitors".

Ryanair's €1.30 a share offer for the 70.18% of Aer Lingus it doesn't already own represented a 38.3% premium over Aer Lingus' closing price when it made the offer last June.