Ms Mary Rose Burke:

I thank the committee for the invitation to speak. I am IBEC's director of policy and corporate affairs. My colleague, Mr. Neil Walker, heads up our infrastructure unit, whose policy remit includes transport and spatial planning. IBEC is by far the largest business representative organisation in Ireland, with thousands of corporate members across dozens of industries, as well in the not-for-profit sector. We operate a countrywide network of staff with regional offices in Cork, Limerick, Galway, Donegal and Waterford, reflecting the broad geographic spread of our membership. This strong regional structure is supported by policy specialists based in our Dublin and Brussels offices. There are frequent interactions on regional concerns, including regular seminars and workshops.

IBEC's transport council, for which Mr. Neil Walker, is responsible, represents both the users and providers of travel and transport infrastructure. It is the national voice of business regarding all transport policy matters. Our core objective for transport policy, including air travel, has always been to ensure appropriate investment in services that will continue to support competitiveness, economic growth and an enhanced quality of life. Our transport council has previously made submissions to Government on national aviation policy, as well as on regulatory issues concerning Dublin Airport.

Over recent weeks, we have taken particular care to consult with our members, through the council, in order to formulate a balanced and an informed position on the implications of a possible sale of the Government's Aer Lingus shares. Given the size and diversity of our membership, it would be unrealistic to expect complete agreement. Nevertheless, there is a fair degree of consensus on the issues at stake and on the approach that ought to be taken in response to IAG's most recent overture. Our members have identified three distinct issues for consideration, namely, the impact of any share sale on the national economy, in particular business and tourism; the impact on balanced regional development; and the impact on our public finances. In addition, I will offer brief observations on the concerns expressed by other stakeholders regarding the extent to which a sale of Aer Lingus shares might lead to rationalisation of jobs in Ireland. I will also speculate on the potential consequences of a decision by the Government not to sell its 25% shareholding at any price.

It is important to start by acknowledging that there is no formal offer from IAG on the table and that we do not yet have all the details in regard to its plans for integrating Aer Lingus into the group in the event of a takeover. However, subject to appropriate safeguards, such a deal could well represent a positive economic opportunity for Ireland as a whole. As I will now outline, there are considerable synergies to be exploited to Ireland's overall benefit. The resulting economic gains would, however, need to be shared across the regions and I will return to this particular point shortly.

Ireland's ease of access to the rest of the world is a key competitive advantage and is crucial for jobs and investment. Excellent connectivity is essential for foreign investors and Irish exporters, as well as our tourism industry. There are good reasons to believe that IAG sees the possible acquisition as a springboard for further growth on the key North Atlantic routes. In recent years, Aer Lingus has successfully grown its share of that market, reflecting the logistical advantage of our location, as well as the brand marketing of what is still seen as our national carrier. Given the capacity constraints at Heathrow, the home base of British Airways, there could well be scope for IAG to promote Dublin as a secondary hub, thereby growing the amount of traffic and improving Ireland's international aviation links. We do not believe that IAG is seeking to buy the company simply in order to strip assets, such as landing slots.

A major concern, however, for some of our members is whether the business plans of IAG would include any commitment to maintaining strong aviation links to Shannon and Cork. Any prospect of reduced frequency of access to Heathrow for Irish travellers would be a big concern, in particular for those using these regional airports.

The outcome on Cork and Shannon Airports of any share sale must, therefore, be a consideration for the Government. International connectivity is a legitimate concern, in particular for our south-west region which is heavily reliant on Heathrow as an aviation hub. However, we believe judgment should be reserved until IAG has had an opportunity to explain its plans in detail and, if possible, to explore ways and means of allaying these concerns. Recent indications are that IAG is, indeed, willing to give appropriate assurances, including binding commitments on the issue of landing slots.

In regard to Ireland's public finances, if a formal offer emerges in excess of €2.50 per share, this would represent more than 60 times the annual dividend paid to the Government over recent years. It would allow for a reduction in borrowing or preferably for an increase in capital investment on essential public infrastructure, such as land transportation. IBEC has for some time been arguing that the level of public investment has been too low for the needs of a growing population and that spending needs to double over the period to 2020.

The proceeds of a share sale could arguably be put to good use rather than retaining the shareholding.

In recent days, some stakeholders have expressed fears that a takeover of Aer Lingus by IAG would lead to large numbers of jobs being lost at the airline. This appears to be based on observations of what happened to Iberia after it was fully merged into IAG in 2011. However, the two situations are not really comparable. Aer Lingus has undergone several rounds of rationalisation during the past decade, becoming one of the most efficient airlines in Europe. As recently as yesterday, Aer Lingus has been seeking to achieve voluntary redundancies in its workforce as part of an initiative that commenced two years ago. Any company, regardless of its ownership, aiming to compete and thrive in a dynamic international market must strive continually to be lean and efficient.

It is worth considering also what might happen in the longer term if the Government was not minded to accept any bid. Although Aer Lingus has been performing well in recent years as an independent national carrier, it remains a small regional player in what is an increasingly consolidated global industry. There are few other groups in Europe capable of offering the same type of strategic fit as IAG, and there is always the possibility of a hostile bidder emerging to take control of the company at some point in the future. The Government stake would not be able to block such an outcome. We anticipate that the expert group now advising the Government on its best course of action will be cognisant of all of these points.

To sum up, we see the proposed merger as potentially very beneficial for the company, for tourism, for inward investment and for the wider business community. We acknowledge that there are legitimate concerns for particular regions but we believe that these can be addressed given sufficient goodwill and trust-building.