Ryanair in Aer Lingus ultimatum to government

Ryanair gave an ultimatum to the Dublin government today: back our takeover of Aer Lingus or give up a 190 million (£169 million) windfall and the chance to create 1000 jobs in the beleaguered Irish economy.

Michael O'Leary, Ryanair's chief executive, cranked up pressure in his 750 million hostile takeover bid for the former state-owned airline signalling Ryanair will walk away if Dublin backs an EU competition investigation not Ryanair's bid.

Despite Ryanair having already racked up a 29% stake in Aer Lingus from an earlier abortive takeover bid, Transport Minister Noel Dempsey holds the key to the battle as the Irish state continues to hold the 25% stake it retained at Aer Lingus's flotation.

Calling for an urgent meeting with Dempsey, O'Leary said: "We are offering 750 million in cash and we have committed to create 1000 jobs in Aer Lingus. We believe 2009 will be a bleak time for Aer Lingus and its shareholders with substantial losses as well as a significant hole in its pension schemes. However, we don't intend to waste our time ... if Aer Lingus shareholders do not want the only merger offer currently available to them to secure Aer Lingus's future."

A successful takeover of Aer Lingus would transform Ryanair, bringing it effective control of the Irish airline industry and for the first time access to take-off and landing slots at Heathrow and a potentially lucrative long-haul business to the US.