Ryanair 'may have to cut Aer Lingus stake'

Ryanair has made several attempts to take over Aer Lingus

Ryanair may have to reduce its stake in Irish carrier Aer Lingus, the UK Competition Commission has said.

The commission said it had concerns Ryanair's 29.8% stake could reduce competition on routes between the UK and Ireland.

Ryanair said the Competition Commission's findings were "unfounded" and "in breach of EU law".

The findings are a further blow for Ryanair, which has made repeated attempts to buy Aer Lingus.

The Competition Commission's provisional findings said that Ryanair's shareholding in Aer Lingus gave it the ability to influence the commercial strategy of the Irish carrier, potentially affecting competition on routes where the airlines compete against each other.

'Bizarre and wrong'

The commission said it was especially worried that the stake would also obstruct Aer Lingus's ability to merge with other airlines - a move that could allow it to make savings and remain competitive.

"We were particularly concerned about Ryanair's influence over Aer Lingus's ability to be acquired by, merge with, or acquire another airline," said the commission's deputy chairman Simon Polito.

"We thought it likely that such a combination would be necessary to increase Aer Lingus's scale and achieve synergies and allow it to remain competitive in future."

There has been a growing trend of consolidation in the airline industry in recent years.

Ryanair chief executive Michael O'Leary described the decision as "bizarre and manifestly wrong".

'Harmed consumers'

He cited a February 2013 report by the European Commission, which he said found that competition between Ryanair and Aer Lingus had intensified since 2007.

In February, the European Commission rejected Ryanair's third attempt to take over Aer Lingus, saying the merger would have harmed consumers, reduced choice and led to increased prices for passengers travelling in and out of Ireland.

The Competition Commission's final decision is due in July. Ryanair said it would appeal if the decision were unchanged.

It is already appealing against the European Commission decision to block the full takeover.