Ryanair To Accuse Aer Lingus Of Market Manipulation

Ryanair said on Monday it plans to formally accuse Irish rival Aer Lingus of market manipulation over what it says was misleading guidance in Aer Lingus' response to Ryanair's hostile bid last year.

The former state airline, in which Ryanair holds an almost 30 percent stake following an earlier hostile bid in 2006, said last week it never responded to Ryanair statements.

"We are preparing a formal complaint of market manipulation," Ryanair chief executive Michael O'Leary told reporters.

"I wouldn't be surprised if certain of Aer Lingus shareholders were considering taking legal action against the board," O'Leary said, adding Ryanair had not been coordinating its plans for complaint with any other investors.

Ryanair said last week it would make a series of complaints to the London and Irish stock exchanges and regulators about Aer Lingus' forecast in December that it would post a pre-tax profit before exceptional costs in both 2008 and 2009.

Aer Lingus said last week that by this measure it had made it into the black in 2008, but it was unlikely to do so in 2009, sending its shares down 27 percent, to less than half of Ryanair's failed bid offer.

Ryanair made an offer of 1.40 euros a share or EUR750 million euros (USD$969 million) in December, basing its offer on the argument that Aer Lingus would not survive as an independent airline. Aer Lingus responded with the positive forecast.

Almost no one responded to the offer and Ryanair pulled it in January after the Irish government, which holds a 25 percent stake in the airline, rejected the bid on competition and valuation grounds.

Ryanair was not specifically aiming for financial compensation, O'Leary said.

Asked what he hoped to achieve with the complaint, O'Leary said: "We would like to require in future that any document produced by Aer Lingus will be truthful and accurate and not blatantly misleading shareholders and the marketplace."

Ryanair also announced on Monday that from the summer it would reduce the number of aircraft based in Dublin to 17 from 22, closing four routes and cutting the frequency of flights on eight others due to an increase in airport charges and taxes.

O'Leary said the airline still expected to increase overall passenger numbers across the network by about 9 million to 67 million this year.