Michael O'Leary: third offer 'unlikely'

Budget airline Ryanair's reserves were boosted by €22.2m thanks to a surge in the share price of Aer Lingus towards the end of 2009.

According to third quarter results released by the airline last week the increase in Aer Lingus shares – from 50 cents to 64 cents – meant it was more than able to reverse an impairment charge of €13.5m the company took on its 29.8% stake in the former state-owned airline earlier in the year when the shares declined.

Ryanair posted a €10.9m loss for the quarter ended 31 December 2009. Had €22.2m gain been recognised in Ryanair's income statement the company would have made a profit for the quarter. However, under accounting rules Ryanair was prevented from booking the gain as a profit.

"All such impairment losses are required to be recognised in the income statement and are not subsequently reversed, while gains are recognised through reserves," Ryanair said in the results statement.

Buying the stake in Aer Lingus has proved costly for Ryanair and its chief executive Michael O'Leary. The airline posted its first loss in 20 years in 2009 because of writedowns related to the decline in Aer Lingus's shares.

O'Leary has repeatedly said he would like to write off Ryanair's investment in Aer Lingus entirely after two takeover bids for the airline failed. That is prevented by accounting rules and the airline must recognise gains or losses on the stake each quarter.

He said last month that it was "highly unlikely" Ryanair would make a third offer for Aer Lingus without getting the blessing of the government, which owns of a quarter of its shares.

Aer Lingus closed at 65.5 cent last week, giving the company a market cap of €349.8m and valuing Ryanair's stake at €104.2m. It bought the shares for about €400m.

Ryanair said last week that net profit for the year to 31 March 2010 would be about €275m, higher than its previous forecast. The company said it planned to double its profits and passenger numbers by 2013.