Flybe Ireland plans on hold as Brussels blocks Ryanair's bid for Aer Lingus
Flybe's plans to expand into Ireland suffered a setback when Ryanair revealed its proposed takeover of Aer Lingus is set to be blocked by the European Commission.
A package of concessions submitted by the Irish budget airline in an effort to overcome competition concerns includes breaking up Aer Lingus, with 43 routes and at least nine aircraft and crew transferring to a new Flybe Ireland division of the Exeter-based group.
The deal was conditional on Ryanair's acquisition of Aer Lingus going ahead, and will now depend on the outcome of an appeal against the Commission's decision to block the takeover.
Ryanair spokesman Robin Kiely said today: "It appears clear from this morning's 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.
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"Given Ryanair's remedies package clearly addresses every issue raised in the EU's Statement of Objections, any decision to prohibit would be manifestly unfair and in contravention of EU competition rules.
"Ryanair has no alternative but to appeal any prohibition decision and we expect to get a fair hearing at the European Courts, as we haven't received one from Commissioner Almunia and his case team. This decision is clearly a political one to meet the narrow, vested interests of the Irish Government and is not based on competition law."
Flybe expressed disappointment at the news but said it would await the outcome of Ryanair's appeal. Its shares were down 10 per cent following today's announcement.
Under the terms of the deal agreed between the two airlines, Ryanair would capitalise Flybe Ireland with 100m euros as well as the forward sales cash from the 43 routes, and Flybe would acquire Flybe Ireland for 1m euros.
Last week, Flybe's chairman and chief executive Jim French said: "Flybe would be proud to have the chance to serve the Irish markets, and would be, as we seek to be throughout the rest of Europe, a good employer and corporate citizen.
"However, before Flybe Ireland can come into being there are many hurdles to overcome, not least the EC accepting the remedies offered by Ryanair in its offer to take over Aer Lingus, and then the shareholders of Aer Lingus accepting an offer from Ryanair. However, Flybe has positioned itself well if these events come to pass, while in the meantime we continue to focus upon the delivery of the cost reduction and efficiency plan we outlined in January."