Mr. Evan Cullen:

I thank the Chairman for this invitation and this opportunity. The Irish Airline Pilots Association represents approximately 1,200 pilots, most of whom are employed within Irish-registered airlines. Some 500 of our members are Aer Lingus pilots who are in all five of the airline's bases at Dublin, Cork, Belfast, Heathrow and Gatwick. We own 7% of Aer Lingus. That is divided among a number of investment vehicles, the largest of which is our pension scheme, which currently holds 2.5% of Aer Lingus. Some of our other shares are in an investment vehicle called Tailwind. The rest of our shares came from the dissolution of the employee share ownership trust and from the internal share options that took place during the 1990s before Aer Lingus was floated. Despite our position as stakeholders under various headings, neither the board of Aer Lingus nor anyone in the International Airlines Group has been in contact with us about this takeover. We do not have any information in addition to that which is readily available to the public.

For the reasons I have set out, and based on the information that is available to us, we have formed the view that the proposed takeover is not good for our members, for the families or for many people who are engaged in aviation in Ireland. While we have not issued any recommendation to our members at this point in time, we plan on doing so at a later stage. I ask the committee to keep an open mind about inviting us back when we have more information as we would like an opportunity to comment after the International Airlines Group or the Minister have made their plans known.

While we agree broadly with everything in the letter that was sent to the Minister by Matt Staunton of IMPACT with regard to the takeover, we would like to ventilate some other issues that have not yet been ventilated in the public domain. I refer, for example, to the incredible amounts of financial gain that will be enjoyed by a small number of managers within Aer Lingus if this transaction goes through. We are also concerned that the price being offered for Aer Lingus is well underneath the asset values of the company. This would be of huge benefit to International Airlines Group shareholders and to the disadvantage of the State and the many citizens who use Aer Lingus. We are also concerned about how the transaction will be completed. We are satisfied, on the basis of what we have been told by our advisers in London, that the International Airlines Group does not have the cash to complete this transaction. It must find a way to raise that cash, either through the sale or the mortgaging of assets. Obviously, the assets that it would sell or mortgage would be Aer Lingus assets. This brings us back to Eircom and to other State assets that were heavily mortgaged in order to generate money to buy those assets.

I have included the letter that was sent to the Minister by Matt Staunton in my presentation. The top right-hand corner of page 6 of the presentation refers to the long-term incentive plan for Aer Lingus management. It makes it clear that under the terms of the group's long-term incentive plan, an early vesting of an award may occur at the discretion of the remuneration committee on a change of control of the company. According to a report in the Irish Independent, which we think is accurate, such a change of control would result in €30 million for the senior and executive management of Aer Lingus.

Point 9 in the appendix to my presentation, which is taken from the annual report of the International Airlines Group, describes how that group achieves cost synergies in cases of consolidation. It would be very naive of anyone to think that the International Airlines Group will not seek to drive greater profits and cost synergies if it is successful. It will do this by eliminating duplication of backroom resources and maintenance services in Aer Lingus and the International Airlines Group. The elimination of duplication is how consolidation works. All of this is set out in points 9, 10 and 11 of the appendix to our presentation. It goes into some detail about how synergies are developed and about the International Airlines Group's targets for synergies in its existing airlines.