Ryanair boss poised to swoop in €1bn bid battle for Aer Lingus

Michael O'Leary, the boss of Ryanair, and a consortium of airline pilots are expected to challenge Aer Lingus management in a €1bn (£670m) battle to privatise the Irish state airline.

Michael O'Leary, the boss of Ryanair, and a consortium of airline pilots are expected to challenge Aer Lingus management in a €1bn (£670m) battle to privatise the Irish state airline.

Willie Walsh, the chief executive of Aer Lingus, approached the Irish government last week with a proposal to buy the flag carrier. He is backed by two other senior executives and an undisclosed private equity firm, widely believed to be 3i.

The government is expected to make its decision shortly, and is tipped to be in favour of selling off Aer Lingus at the right price.

Mr Walsh is understood to have indicated that his team is willing to pay more than €500m for the airline, but a bidding battle for the business, which made profits of €83m last year, could double that valuation.

Two other bidders are expected to emerge in the next few days. The 450 pilots at Aer Lingus have retained financial adviser Chapman Flood Mazars to put together an offer. They are understood to have been in talks with five different venture capital firms about obtaining backing.

Meanwhile, Dublin sources have said that Mr O'Leary may also be putting together a group to bid for Aer Lingus. This would not be an offer by Ryanair itself, but would see the two Irish airlines run separately by the same boss.

The normally outspoken Mr O'Leary has not commented on his intentions.

One group believed to have ruled itself out of the Aer Lingus bidding is British Airways. The UK flag carrier has a strong relationship with Spanish airline Iberia and is concentrating any investment in that direction.

The thought of privatising Aer Lingus would have been fanciful only two years ago. After the 11 September terrorist attacks it teetered on the brink of bankruptcy, losing €52.1m.

However, Mr Walsh re-invented the company as a low-cost airline, exploiting its good slots at international airports and it made an operating profit of €63.8m in 2002 and €83m in 2003.