Ryanair 2010 Annual Report Download - page 153

151
4 Available-for-sale financial assets
At March 31,
2010 2009 2008
1M 1M 1M
Investment in Aer Lingus ................................................................
............
116.2 93.2 311.5
As at March 31, 2010 Ryanair’s total holding in Aer Lingus was 29.8% (2009: 29.8%; 2008: 29.3%).
The balance sheet value of 1116.2 million (2009: 193.2 million; 2008: 1311.5 million) reflects the market value
of this investment as at March 31, 2010. In accordance with the Company’s accounting policy, these assets are
held at fair value with a corresponding adjustment to other comprehensive income following initial acquisition.
All impairment losses are recognised in the income statement and any cumulative loss previously recognised in
other comprehensive income is transferred to the income statement once an impairment is considered to have
occurred. During the year, the Company recorded an impairment charge of 113.5 million (2009: 1222.5 million;
2008: 191.6 million) on its Aer Lingus shareholding reflecting the decline in the Aer Lingus share price from
10.59 per share at March 31, 2009 to 10.50 per share at June 30, 2009. The subsequent increase in the Aer
Lingus share price from 10.50 at June 30, 2009 to 10.73 at March 31, 2010 resulted in a gain of 136.5 million,
which was recognised through other comprehensive income. All impairment losses are required to be recognised
in the income statement and may not be subsequently reversed, while gains are recognised through other
comprehensive income.
This investment is classified as available-for-sale, rather than as an investment in an associate, because
the Company does not have the power to exercise any influence over the entity. The Company's determination
that it does not have any influence over Aer Lingus has been based on the following factors, in particular:
(i) Ryanair does not have any representation on the Aer Lingus board of directors, nor does it
have a right to appoint a director;
(ii) Ryanair does not participate in Aer Lingus’ policy-making decisions, nor does it have a right
to participate in such policy-making decisions;
(iii) There are no material transactions between Ryanair and Aer Lingus, there is no interchange of
personnel between the two companies and there is no sharing of technical information between the companies;
(iv) Aer Lingus and its principal shareholders (Irish government: 25.1%; Employee Share
Ownership Plan: 14.2%) have openly opposed Ryanair’s investment or participation in the company;
(v) On August 13, 2007 and September 4, 2007, Aer Lingus refused Ryanair’s attempt to assert
its statutory right to requisition a general meeting (a legal right of any 10% shareholder under Irish law). The
Aer Lingus Board of Directors refused to accede to these requests (by letters dated August 31, 2007 and
September 17, 2007); and
(vi) The European Commission has formally found that Ryanair’s shareholding in Aer Lingus
does not grant Ryanair “de jure or de facto control of Aer Lingus” and that “Ryanair’s rights as a minority
shareholder…are associated exclusively to rights related to the protection of minority shareholders”
(Commission Decision Case No. COMP/M.4439 dated October 11, 2007). The European Commission’s finding
has been confirmed by the European Union's General Court which issued a decision on July 6, 2010 that the
European Commission was justified to use the required legal and factual standard in its refusal to order Ryanair
to divest its minority shareholding in Aer Lingus and that, as part of that decision, Ryanair’s shareholding did
not confer control of Aer Lingus (Judgment of the General Court (Third Chamber) Case No. T-411/07 dated
July 6, 2010).
On December 1, 2008 Ryanair made a second offer to acquire 70.2% of the ordinary shares of Aer
Lingus plc that it does not already own. However, the Company was unable to secure the shareholders’ support
and accordingly on January 28, 2009 withdrew its offer for Aer Lingus.