Michael O'Leary is on the warpath again at Aer Lingus. Well, actually, his call for an emergency meeting of shareholders in the Irish carrier is really part of a despairing search for an exit from an investment that ranks as a glaring mistake in his otherwise extraordinary career.
Was it hubris or just his sense of mischief that persuaded the Ryanair boss to build a stake in Aer Lingus and bid for the airline in 2006 soon after its privatisation? Either way, the adventure seemed doomed to failure from the off. European competition authorities, predictably, blocked the bid at €2.80 a share. O'Leary had another go at €1.40 two years later and that effort, too, went nowhere.
Aer Lingus's share price has since halved again, meaning that Ryanair's 29.8% stake has dwindled in value by about €300m over the years. O'Leary may be correct in thinking that the payment of a dividend might awaken bid interest, thus encouraging the Irish government to flog its 25% holding. But Ryanair itself is no longer interested in buying the lot.
Even in 2006/07, Ryanair was well on its way to becoming Europe's largest airline, beating up the likes of Aer Lingus in the process. It had no sound commercial reason for playing speculative takeover games in its own backyard; nor was there any logic in hanging onto the shares. For a man who prides himself on controlling costs, O'Leary's open-ended investment in a struggling minor competitor was a bizarre trip to nowhere in particular.
