’s () chances of getting EU approval to buy Aer Lingus ( ) are not high suggests JP Morgan, but that may not be bad news for its shareholders.
The European authorities announced yesterday that they were to launch a Phase II inquiry into the bid, forcing to lapse its offer.
However, the no-frills airline said it would re-bid if it gets the go-ahead from Europe.
The US broker doubts this will happen after comments from the European Commission that competition concerns had increased since it rejected ’s first attempt to buy its rival in 2007.
JPM also said that while buying Aer Lingus would be a low risk move given its strong balance sheet and good underlying margins, the deal may not benefit shareholders.
The broker said it cannot see the strategic rationale in a low-cost carrier such as buying a legacy carrier such as Aer Lingus unless it is a way for to hedge its US$ costs with Aer Lingus' US$ revenues.
At least part of ’s investment thesis is also predicated on returning excess cash to shareholders, something the broker believes may be potentially be less likely if it acquired Aer Lingus.
Shares in today rose 0,03c to €4.16, while Aer Lingus dipped slightly to €1.07.