Ryanair files suit over alleged Greek state aid to Olympic, ‘happy’ with Aer Lingus losses

Ryanair Holdings PLC filed a lawsuit Thursday against the European Commission — its third such action this month in complaints challenging funding of national airlines by European governments.

In its latest suit, Ryanair accused EU competition authorities of failing to investigate €500 million (US$740 million) in money paid by the Greek government to Olympic Airlines.

Last week, Ryanair filed a suit accusing the EU of inaction over German government funding of a loss-making terminal at Munich Airport used by Lufthansa. Two weeks ago, it took the same action, claiming that France subsidized the airport charges and other costs for domestic Air France flights.

All three suits have been filed at the European Court of First Instance in Luxembourg, the second-highest EU court, which appears in danger of having its caseload overwhelmed by lawsuits involving Ryanair.

Ryanair is the target of several suits already filed by other European airlines, which allege that Ryanair has struck government-subsidized deals with far-flung airports from Finland to Sardinia. Ryanair’s Irish rival, Aer Lingus, also filed a suit in Luxembourg this week calling on the EU to force Ryanair to sell its shareholding in Aer Lingus.

O’Leary said Greece had paid Olympic about €500 million over the past year, “mostly for ‘unpaid services’ allegedly provided by Olympic to the government. However, the (European) Commission has refused to do anything about this since 2006, which left us with no alternative but to challenge the commission’s inaction in the European courts.”

He said the commission “repeatedly ignores blatant state aid to Air France, Lufthansa, Olympic, Alitalia and others.” He said flag-carrier airlines “would never fly to smaller airports and are simply trying to prevent competition and consumer choice.”

O’Leary said he remained confident that Ryanair eventually would acquire Aer Lingus, regardless of an EU verdict in June ruling out its takeover plan as likely to create an Irish monopoly.

He said Ryanair had suffered a paper loss of €60 million (US$89 million) from its purchase of a 29.4 percent stake in Aer Lingus.

“I’m celebrating the fall in value in our investment in Aer Lingus. It’s an accurate response to the management’s current performance,” O’Leary said.

“Aer Lingus is likely to be taken over. But the most likely candidate to take over Aer Lingus is Ryanair, because frankly nobody else has any interest in taking over Aer Lingus,” he said. “It’s too small and too high-cost to survive as an independent airline.”

Ryanair shares were up 0.7 percent at €4.55 (US$6.74) amid another day of heavy losses on the Irish Stock Exchange. Aer Lingus was up 2.1 percent at €1.94 (US$2.87) — still 12 percent below its September 2006 flotation price, and 31 percent below Ryanair’s takeover price offered in October 2006.

Ryanair has become the largest shareholder in Aer Lingus. But analysts say it stands little chance of reaching the 50 percent threshold for a viable takeover because the government and Aer Lingus employee-controlled trusts, which together hold about 45 percent of shares, oppose Ryanair’s plans.

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