Aer Lingus has started sounding the takeover alarm. The new head of the airline has warned the company risks being taken over by its larger rival Ryanair unless all employees agree to his restructuring plans for sweeping cost cuts.
The issue is that if Aer Lingus isn't capable to control it's own costs and plan ahead , then the likelihood of being taken over and hence remain non independent is more likely to occur. Aer Lingus biggest rival is Ryanair, which has already placed two bids for Aer Lingus over the past years. Ryanair first bid €2.80 a share for Aer Lingus in October 2006, valuing the company at €1.48bn. That takeover was blocked by the European Commission on competition grounds. A second bid worth half that of the first in December last year also failed after the Irish government, which has a 25 per cent stake in Aer Lingus, said it undervalued the airline.
According to Irish takeover laws, Ryanair has the opportunity of making another takeover bid in late January...it is believed that the failure to reach an agreement with unions will increase the likelihood of the bid. Ryanair who already control just over 29 per cent of Aer Lingus is seeking to increase it shareholding to take full control.
The new chief executive officer of Aer Lingus who joined just a few months ago has devised plans and started talks to cut job and pays in order to save about €97m, however the Airline is still struggling in the negotiations with the pilots.
Aer Lingus this year reported a pre-tax loss of €119.7m and analysts say a failure to cut costs could jeopardise its independence.
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