Ryanair, the Irish no-frills airline, has launched a shock €1.48 bn takeover bid for fellow Irish carrier Aer Lingus in a move which would give it control over three quarters of all flights between Ireland and Europe.

 The offer comes just a week after the formerly state-owned Aer Lingus was floated on the stockmarket, and has met with considerable resistance. The board of Aer Lingus unanimously rejected the €2.80-a-share offer, stating that it “significantly undervalues the group's businesses and attractive long-term growth potential.”

Meanwhile, the Irish government, which owns a 28% stake, has declared it will not sell its shares and is expected to oppose any takeover in the courts on competition grounds. 

Ryanair, which has so far amassed a 19.2 per cent stake in the company, has replied by saying that it does not expect the government to part with its shares, and that any shareholding of above 50 per cent would be “quite acceptable”.

If the takeover goes ahead, both companies would continue to trade under their own brands and the management would remain separate. They would compete for business on the small number of routes on which they both fly - 17 routes out of a total of 500. 

However, any takeover would have to be approved by both the Irish and European courts of competition and many predict that Ryanair would have a tough time satisfying the strict regulatory issues designed to prevent a monopoly.