The Irish government has urged the UK Competition and Markets Authority (CMA) to force Ryanair to sell the majority of its stake in Aer Lingus.
A letter from the Irish department of transport to the CMA (formerly the UK Competition Commission) said the watchdog should not alter its stance that Ryanair be forced to cut its Aer Lingus stake from around 30 per cent to no more than 5 per cent.
In 2013, the Commission ordered Ryanair to reduce its Aer Lingus stake due to competition concerns. It also claimed that as Ryanair is such a large stakeholder it will deter other airlines from investing.
However, Ryanair claims that IAG’s recent bids to buy Aer Lingus “wholly disproves the unsubstantiated claim its shareholding prevents other airlines from merging with or bidding for Aer Lingus”.
The letter seen byIrish Independentstates that the department agrees with the original decision and it should still stand.
“The department considers that the IAG proposal confirms that merger and acquisition opportunities exist for Aer Lingus but that it also confirms that interest in acquiring Aer Lingus is contingent on Ryanair exiting Aer Lingus' share register," senior civil servant, Ethna Brogan, said in her letter to the CMA.
"I can confirm that it remains the position of the Government that it is unlikely to sell its shareholding in Aer Lingus while Ryanair continues to be a significant minority shareholder.
"The department considers that the CMA should...proceed with the remedial action," she added.
Aer Lingus has stated it’s willing to accept a takeover from the British Airways owner of €2.55 a share but proposals put forward have so far failed to gain approval from government and trade unions, who want stronger guarantees over jobs and routes.