DUBLIN (AP) ― Leading European budget airline Ryanair launched a surprise new takeover bid Tuesday for its Irish rival Aer Lingus and called on the cash-strapped Irish government to sell its key stake this time.

Dublin-based Ryanair said it would offer 1.30 euros ($1.65) per share, a 38 percent premium over Aer Lingus’ current share price, in a deal that would value the airline at 694 million euros.

Ryanair launched a hostile takeover of Aer Lingus in 2006 immediately after Ireland floated the state airline on the Irish and British stock exchanges. But the government refused to sell its remaining 25 percent stake and European Union regulators blocked the bid on competition grounds, saying a merged Ryanair-Aer Lingus operation would control more than 80 percent of Ireland’s air passenger traffic.

Playing a long game of attrition, Ryanair since has remained Aer Lingus’ largest shareholder with a 29.8 percent stake and sought, unsuccessfully, to influence boardroom decisions.

Aer Lingus and the government declined to respond Tuesday. Labor unions and opposition politicians appealed to the government not to sell to Ryanair, renowned as a ruthless cost-cutter with a relentless pursuit of building market share.

But in a statement Ryanair argued that the reasons for the government not to sell had evaporated since the demise of the Celtic Tiger economic boom in 2008, followed quickly by Ireland’s international bailout in 2010.

As part of its debt-cutting negotiations with EU and International Monetary Fund lenders, the 15-month-old government of Prime Minister Enda Kenny has promised to sell state assets. It already has indicated plans to sell its Aer Lingus stake if the price and competition effects are right. Unlike their government predecessors, Kenny and Finance Minister Michael Noonan haven’t ruled out a sale to Ryanair.

“Since the government’s stake in Aer Lingus will now be sold,” Ryanair said, “the important policy issue is whether it will be sold to a successful Irish-based company which will support growing Aer Lingus’ traffic, lowering its unit costs and creating new jobs, or whether it will be sold to a non-Irish investor which will, Ryanair believes, lead to the inevitable break-up of Aer Lingus.”

United Arab Emirates-based Etihad Airways earlier this year bought a 3 percent stake in Aer Lingus and has expressed interest in buying the government’s stake. Ryanair said if Etihad or any other foreign airline did manage this, Ryanair would be willing to sell its stake to the successful bidder. Aer Lingus, meanwhile, is still pursuing a lawsuit against Ryanair seeking to force its rival to divest its holding on competition grounds.

But Ryanair said it’s confident that, even if the government balked, it cannot stop Ryanair from reaching the 50 percent share ownership needed to trigger an outright takeover. It noted that an Aer Lingus employee-controlled trust owned 15 percent of shares in 2006, but that trust was broken up in 2010, so this time it would be a matter of persuading individual shareholders to cash in their chips at a price that the airline’s stock hasn’t reached in four years.

Ryanair chief executive Michael O’Leary said the new offer “represents a significant opportunity to combine Aer Lingus with Ryanair, to form one strong Irish airline group capable of competing with Europe’s other major airline groups led by Air France, British Airways and Lufthansa.” He forecast that a Ryanair-run Aer Lingus would grow its traffic from 9.5 million passengers last year to 14 million passengers within five years of acquisition. He reiterated Ryanair’s promise to maintain Aer Lingus as a separate brand and business.

If successful, Ryanair would take control of an airline that recognizes labor unions, has much higher operating costs than Ryanair, and struggles to post profits regularly. Aer Lingus also is a trans-Atlantic operator with several direct routes to U.S. cities. And unlike Ryanair, which operates from London’s other three major airports, Aer Lingus has valuable slots at Heathrow, a major European hub for connecting flights.

Although Ryanair has lost tens of millions on its slumping Aer Lingus investment to date, Ryanair can easily afford the new bid. Last month Ryanair reported record profits and said its cash reserves had grown 34 percent over the year to 2.7 billion euros ($3.4 billion).