Aer Lingus accuses Ryanair of misrepresentations

The war of words between Ryanair and takeover target Aer Lingus escalated yesterday as the latter said Ryanair had made "numerous misrepresentations" and its shares had underperformed.

Ryanair, which earlier this month launched a €1.48 billion hostile bid to take over the rival Irish airline, said on Thursday that Aer Lingus staff had less reason to reject its offer, given reports of possible job cuts.

"The statement issued by Ryanair Holdings Plc at 4.39 p.m. yesterday... contains a number of serious inaccuracies and misrepresentations," Aer Lingus said in a statement.

Europe's biggest budget airline said that members of Aer Lingus's Employee Share Ownership Trust (ESOT), which has a 12.6 per cent stake in the airline, at least could expect to get €60,000 each by selling their shares to Ryanair.

ESOT then issued a statement, however, saying the €186 million it would receive if it were to accept Ryanair's offer would not stretch that far, given borrowing costs of €35 million after the exercise of an option to buy extra shares.

Employee members could expect to receive an average of €38,864 each, and former staff would get €13,915, it said, adding that it was still investigating Ryanair's claims that any gain made by ESOT members from selling their shares would be tax-free if they used the funds to buy Ryanair stock.

Unlike the government, which has said it will not sell its 25.35 per cent stake, and a number of smaller Aer Lingus shareholders opposed to the bid, ESOT has yet to say whether it will accept it.

Aer Lingus management, which has said job cuts are possible if it is to stay independent and compete with Ryanair, again made its opposition clear yesterday.

"This purported tax-free status is highly conditional, dependent on Revenue approval and, extraordinarily, dependent on Aer Lingus employees and former employees going into the public markets and buying shares in Ryanair, a company whose stock has underperformed other European airlines during 2006," it said.