Ryanair makes fresh takeover bid for Ireland's flag carrier Aer Lingus

Ryanair has made a fresh attempt to buy Aer Lingus, after the low-cost airline unveiled its intention to bid €694m (£560m) for its Irish rival last night.

The low cost carrier, headed by Michael O'Leary, already owns 29.82 per cent of Aer Lingus. Its €1.30-a-share cash offer would value the stock Ryanair does not already own at €486m. Aer Lingus shares closed at €0.94 before the approach was made last night.

Ryanair's latest offer comes within days of the Office of Fair Trade referring Ryanair's stake in Aer Lingus to the Competition Commission to consider if it affected competition for UK consumers. The regulator could force Mr O'Leary to sell the Aer Lingus stake, which was built up when the shares were closer to €3 apiece.

It comes five years after the European Commission blocked its attempt to buy Aer Lingus shortly after the Irish flag carrier was privatised. However, Ryanair said yesterday "that circumstances have changed materially since its first unsuccessful bid in late 2006".

Firstly, Ryanair argued that Europe's airlines are in the process of merging into five large groups that will be led by Air France, British Airways, EasyJet, Lufthansa and Ryanair. It cited last year's merger of Heathrow's two biggest operators, BA and Iberia, as evidence the competition landscape had changed. Ryanair's takeover of Aer Lingus would allow its acquisition to cut costs and reverse its recent traffic decline, the company added.

Dublin Airport, which was once congested, is now operating at about 50 per cent capacity, "removing the barrier to any new entrants", Ryanair added. Meanwhile, the Irish government now has to sell the 25 per cent it retained after Aer Lingus floated to meet IMF bailout conditions.

"Ryanair believes that any competition concerns which the European Commission may have can be addressed by Ryanair making appropriate remedies prior to the completion of this offer and by significant synergies and cost efficiencies resulting from this combination," the group said.

However, analysts were sceptical. Brian Devine, NCB Stockbrokers in Dublin said: "It is very hard to see how it would be accepted by European competition authorities."