December 19, 2008
Irish carrier Aer Lingus opened a new base at London's Gatwick Airport on Friday and rejected criticism from Ryanair about its business forecasts in an increasingly hostile takeover battle.
Aer Lingus chief executive Dermot Mannion told reporters he completely rejected Ryanair's accusation that the former Irish state carrier was making "contradictory claims and forecasts".
Aer Lingus expects its financial performance to improve in 2009 on the back of a cost-cutting deal with unions and the falling price of oil. It has previously forecast an operating loss for next year and has not yet given specific forecasts for 2009.
"The halving of the fuel price dramatically improves the prospects for the entire industry," Mannion said at a news conference in London.
He declined to give an estimate for operating performance this year or next.
Aer Lingus has come out fighting against Ryanair's EUR750 million euros (USD$1.05 billion) or 1.40 euro a share bid, its second in as many years, with plans to expand its short-haul operations with a new base at London Gatwick airport.
The former state airline said it will operate short-haul services to Ireland and European destinations from Gatwick, its first base outside Ireland.
The expansion will cost GBP100 million pounds in the first year and 120 new jobs will be created. Four Airbus A320 short-haul aircraft will initially be based at Gatwick and that is expected to grow to eight within a year.
"The Gatwick operation will complement our existing services out of London Heathrow, and position Aer Lingus for growth as we roll out new routes and bases in future years," Mannion said.
He declined to comment on a report in an Irish newspaper that said Aer Lingus was expected to restore the Shannon-to-Heathrow link it scrapped last year.
Ryanair said it was concerned comments made by Aer Lingus about its trading performance and prospects following the launch of its recent takeover offer were much more upbeat than those made in Aer Lingus' November 11 interim management statement.
"We, as a large shareholder, are concerned about some of these apparently contradictory claims and forecasts, and their impact upon Aer Lingus' forecast post exceptional net profit (loss) after tax for 2008 and 2009," Ryanair said in a shareholder letter to Aer Lingus.
In the letter Ryanair asked Aer Lingus to clarify the impact of increased costs, the loss of revenue arising from the elimination of fuel surcharges and capacity reductions as well as its expected defence fees.
Ryanair officially launched its attempt to take over Aer Lingus on Monday by writing to its smaller rival's shareholders, asking its all-cash bid despite the rejection by Aer Lingus board and management.
Ryanair, which already owns almost 30 percent of Aer Lingus, has said other investors should vote for the creation of a united Irish airline by January 5.
Ryanair, whose previous bid in 2006 was blocked by the European Commission on competition grounds, hopes the recent wave of consolidation in the sector will persuade the EU to allow a takeover this time.
(Reuters)
