The European Commission has rejected Ryanair's latest takeover bid for Aer Lingus, in a move which the budget Irish carrier says it will fight in the courts.
Rynair's "radical" bid had included a 100 million euro deal with Exeter-based Flybe to take over 43 short-haul Aer Lingus routes in order to satisfy competition rules, creating a new business, Flybe Ireland.
Flybe said that it was "disappointed" by the EC's decision and that it remains "firmly" of the view that the Ryanair proposal "would have afforded credible and robust competition, including new jobs and bases in Ireland."
Ryanair, which holds a 29.8% stake in Aer Lingus, has accused the EC of political decision-making to protect the interests of the Irish government – which holds a 25% share in the carrier– and not one based on competition rules.
Ryanair spokesman Robin Kiely said: "We believe that we have strong grounds for appealing and overturning this politically-inspired prohibition."
Aer Lingus said consumers were being better served by vigorous competition set by the two airlines. Its chief executive Christoph Mueller said: "The series of inadequate remedy offers presented by Ryanair only underlines the view that Ryanair made its offer without any reasonable belief that it could obtain clearance."
Joaquin Almunia, European Commissioner for competition, said the decision would protect more than 11 million passengers flying in and out of Dublin, Cork, Knock and Shannon.
"For them, the acquisition of Aer Lingus by Ryanair would have most likely led to higher fares," he said.
"During the procedure, Ryanair had many opportunities to offer remedies and to improve them. However, those proposals were simply inadequate to solve the very serious competition problems which this acquisition would have created on no less than 46 routes."