By Jonathan Saul and Andras Gergely
DUBLIN, Dec 5 (Reuters) - Aer Lingus said on Friday it would present a defence strategy to fend off a new 750 million euro ($959 million) bid by rival Irish airline Ryanair, saying investors would back its independence.
Aer Lingus Chief Executive Dermot Mannion told broadcaster Newstalk that the company would defend its independence vigorously.
Earlier on Friday, unions representing workers at Aer Lingus rejected guarantees given by Ryanair that it would maintain their representation as part of its bid for the former state airline.
Ryanair is trying to appeal directly to the government and employees, which own more than 25 percent and 14 percent of the carrier, respectively, after Aer Lingus's board this week rejected the all-cash offer, for the second time in two years.
'The corporate culture of Ryanair is just something that is a complete anathema to our members,' said Niall Shanahan, communications officer with the IMPACT union.
'An approach from Ryanair, having been through this process already, is something instinctively they would want to reject,' said Shanahan.
'We already have union recognition in Aer Lingus, so (Ryanair Chief Executive) Michael O'Leary is not offering anything new or extra,' said a SIPTU union spokesman.
The Employee Shareholder Ownership Trust (ESOT), which administers Aer Lingus employees' shareholdings and is a separate entity to the unions, is expected to meet on Monday to discuss Ryanair's bid, a source familiar with the matter told Reuters.
The Irish government has said it would wait until Ryanair tabled a formal offer before giving its opinion.
Ryanair plans to submit the formal offer within the next two weeks, after which it will give Aer Lingus shareholders about 30 to 40 days to decide, Chief Executive Michael O'Leary said.
'We hope, with further meetings with the government, the unions, the ESOT, that we will persuade everybody that this is the only future for Aer Lingus,' O'Leary told RTE television.
Ryanair, Europe's biggest budget airline, already owns nearly 30 percent of Aer Lingus.
Ryanair said on Thursday it would recognise trade unions at the airline, in contrast to its own company policy. It said it would give the Irish government control over Aer Lingus's valuable landing slots at London Heathrow airport and restore the Shannon-Heathrow route.
MERGER MANIA
Ryanair tried to buy Aer Lingus for double the price of its current bid in 2006, but it was thwarted by an EU ruling that it would create a near monopoly in European flights out of Dublin.
Employees and the government also rebuffed Ryanair's earlier offer for Aer Lingus in 2006 when the airline was privatised.
It has made an all-cash offer of 1.40 euros per share this time.
Aer Lingus shares closed 12.9 percent higher at 1.53 euros in London, while Ryanair's shares rose 2.4 percent to 3.01 euros.
The two unions, IMPACT and SIPTU, represent the majority of workers including pilots, cabin crew and ground staff at Aer Lingus.
Aer Lingus said on Friday passenger traffic last month was down 3.6 percent year-on-year due to uncertainty over the threat of industrial action amid its cost cutting plan and continued weakness in its long-haul market in the United States.
It later said enough SIPTU members had signed up to cost cuts to deliver the 25 million euros of savings targeted in relevant departments, with further savings to follow elsewhere.
Analysts believe a recent spate of airline mergers and the absence of another suitor give Ryanair a better chance of getting this offer past competition authorities in Brussels.
'Merger mania doesn't necessarily make that strategy right,' Aer Lingus's Mannion said.
NCB analyst Neil Glynn said the success of the bid would be largely dependent on the appetite of shareholders, including the government and ESOT to sell their stakes and on Brussels' stance.
'We continue to see Ryanair's offer of 1.40 euros per share as undervaluing Aer Lingus's strategic value to it and expect that the offer price will have to be raised,' Glynn wrote in a research note.
Ryanair's new bid comes amid a wave of mergers and consolidation in the airline sector, as the industry tries to cope with fluctuations in fuel prices and the worldwide economic downturn.
Earlier on Friday, German airline Lufthansa signed a deal for the purchase of loss-making Austrian Airlines , in a move that will make it Europe's biggest airline.
(Editing by Andrew Macdonald and Rupert Winchester) ($1=.7821 Euro) Keywords: RYANAIR AERLINGUS/ (jonathan.saul@reuters.com; +353 1 500 1504; Reuters Messaging: jonathan.saul.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
DUBLIN, Dec 5 (Reuters) - Aer Lingus said on Friday it would present a defence strategy to fend off a new 750 million euro ($959 million) bid by rival Irish airline Ryanair, saying investors would back its independence.
Aer Lingus Chief Executive Dermot Mannion told broadcaster Newstalk that the company would defend its independence vigorously.
Earlier on Friday, unions representing workers at Aer Lingus rejected guarantees given by Ryanair that it would maintain their representation as part of its bid for the former state airline.
Ryanair is trying to appeal directly to the government and employees, which own more than 25 percent and 14 percent of the carrier, respectively, after Aer Lingus's board this week rejected the all-cash offer, for the second time in two years.
'The corporate culture of Ryanair is just something that is a complete anathema to our members,' said Niall Shanahan, communications officer with the IMPACT union.
'An approach from Ryanair, having been through this process already, is something instinctively they would want to reject,' said Shanahan.
'We already have union recognition in Aer Lingus, so (Ryanair Chief Executive) Michael O'Leary is not offering anything new or extra,' said a SIPTU union spokesman.
The Employee Shareholder Ownership Trust (ESOT), which administers Aer Lingus employees' shareholdings and is a separate entity to the unions, is expected to meet on Monday to discuss Ryanair's bid, a source familiar with the matter told Reuters.
The Irish government has said it would wait until Ryanair tabled a formal offer before giving its opinion.
Ryanair plans to submit the formal offer within the next two weeks, after which it will give Aer Lingus shareholders about 30 to 40 days to decide, Chief Executive Michael O'Leary said.
'We hope, with further meetings with the government, the unions, the ESOT, that we will persuade everybody that this is the only future for Aer Lingus,' O'Leary told RTE television.
Ryanair, Europe's biggest budget airline, already owns nearly 30 percent of Aer Lingus.
Ryanair said on Thursday it would recognise trade unions at the airline, in contrast to its own company policy. It said it would give the Irish government control over Aer Lingus's valuable landing slots at London Heathrow airport and restore the Shannon-Heathrow route.
MERGER MANIA
Ryanair tried to buy Aer Lingus for double the price of its current bid in 2006, but it was thwarted by an EU ruling that it would create a near monopoly in European flights out of Dublin.
Employees and the government also rebuffed Ryanair's earlier offer for Aer Lingus in 2006 when the airline was privatised.
It has made an all-cash offer of 1.40 euros per share this time.
Aer Lingus shares closed 12.9 percent higher at 1.53 euros in London, while Ryanair's shares rose 2.4 percent to 3.01 euros.
The two unions, IMPACT and SIPTU, represent the majority of workers including pilots, cabin crew and ground staff at Aer Lingus.
Aer Lingus said on Friday passenger traffic last month was down 3.6 percent year-on-year due to uncertainty over the threat of industrial action amid its cost cutting plan and continued weakness in its long-haul market in the United States.
It later said enough SIPTU members had signed up to cost cuts to deliver the 25 million euros of savings targeted in relevant departments, with further savings to follow elsewhere.
Analysts believe a recent spate of airline mergers and the absence of another suitor give Ryanair a better chance of getting this offer past competition authorities in Brussels.
'Merger mania doesn't necessarily make that strategy right,' Aer Lingus's Mannion said.
NCB analyst Neil Glynn said the success of the bid would be largely dependent on the appetite of shareholders, including the government and ESOT to sell their stakes and on Brussels' stance.
'We continue to see Ryanair's offer of 1.40 euros per share as undervaluing Aer Lingus's strategic value to it and expect that the offer price will have to be raised,' Glynn wrote in a research note.
Ryanair's new bid comes amid a wave of mergers and consolidation in the airline sector, as the industry tries to cope with fluctuations in fuel prices and the worldwide economic downturn.
Earlier on Friday, German airline Lufthansa signed a deal for the purchase of loss-making Austrian Airlines , in a move that will make it Europe's biggest airline.
(Editing by Andrew Macdonald and Rupert Winchester) ($1=.7821 Euro) Keywords: RYANAIR AERLINGUS/ (jonathan.saul@reuters.com; +353 1 500 1504; Reuters Messaging: jonathan.saul.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.