19/06/2012 16:15 BST

Ryanair In New Takeover Bid For Aer Lingus

Budget airline Ryanair has mounted a fresh bid to seize control of its rival Aer Lingus by tabling an offer valuing the company at €694 million (£559.6 million).

Ryanair, which owns a 29.8% stake in its rival, aims to boost the Aer Lingus' passenger numbers by 4.5m to 14m over the next five years by forming "one strong Irish airline" to compete with major European players.

A previous takeover attempt in 2006 was rejected by regulators but Ryanair said consolidation and the economic downturn had since left Aer Lingus "exposed as a small and uncompetitive airline".

Ireland's opposition party, Fianna Fail, called on the Irish government to use its shareholding in Aer Lingus to prevent Ryanair from taking control of the airline.

Transport spokesperson Timmy Dooley said: "The existence of Ryanair and Aer Lingus as separate competing entities has transformed our tourism and business connectivity.

"Any material change to the separate status of these airlines would inevitably lead to reduced competition, increased fares and less choice.

"Ryanair has provided good competition in the Irish market for many years.

"Its business model has resulted in cheaper fares and helped grow the Irish tourism market. What we don't want is to see a reversal of this position."

The fresh bid for Aer Lingus comes as Ryanair faces being forced to sell its stake in the company after the Office for Fair Trading referred its holding to the Competition Commission for a full investigation.

But Ryanair said British Airway's recent takeover of British Midland was the latest in a series of consolidations.

The European industry was "inexorably" moving towards being controlled by five large airlines led by Air France, BA, easyJet, Lufthansa and itself, it argued.

Ryanair plans to make Aer Lingus more competitive by reducing its fares and costs, and reversing recent declines in traffic, from 10.4m in 2009 to 9.5m in 2011.

Since its last bid was rejected, it said the landscape had changed as a result of consolidation, a fall in traffic at Dublin airport and the Irish government's decision to sell its 25% in the Irish flag carrier.