Mr. Willie Walsh:

The first point to make is that Aer Lingus Regional is not a subsidiary of Aer Lingus but a franchise carrier operating on behalf of Aer Lingus. There is no Aer Lingus ownership in Aer Lingus Regional. My understanding is that it is owned by Stobart Air and operates under a ten-year franchise agreement that was signed in 2012. We believe that it is fundamental to the success of Aer Lingus and the airline's strategy to feed traffic into Ireland principally from the UK provincial airports. We also believe that the franchise arrangement should continue and we would be committed to maintaining that relationship, subject of course to the owners of Aer Lingus Regional-Stobart Air, being prepared to continue to do so.

It was suggested by some people who appeared before the committee that there is no evidence or history of such arrangements with IAG but that is not correct. Iberia, one of our companies, has a long-standing relationship with Air Nostrum in Spain, which operates on a similar basis. It is not owned by Iberia but operates as an Iberia franchise carrier. That arrangement has been in place since 1997. British Airways has a franchise operator in South Africa called Comair. British Airways is a small shareholder in that business and has had a long-standing relationship with it and anybody who has visited South Africa may have seen a lot of BA branded aircraft there. That is a franchise operation. British Airways also has a long-standing franchise relationship with Sun Air in Scandinavia. We have a history of operating with franchise operators and our understanding of the Aer Lingus-Stobart Air relationship is that it is a positive one for both parties. Therefore, we believe that the franchise arrangement should continue.

On the question of Knock Airport, Aer Lingus operates a service from Knock to Gatwick Airport and our understanding is that it is a profitable operation. We think that through the relationship with British Airways at Gatwick we can enhance that service. British Airways has a network to Europe from Gatwick Airport that is actually more extensive than our network from Heathrow. We serve more European destinations from Gatwick than from Heathrow and believe there is an opportunity to feed traffic to and from that Aer Lingus service. Therefore, we believe that our bid, if successful, would enhance the value of that.

My remarks on damaging Aer Lingus related to some comments that were made about what the Irish Government can do to influence decision-making in Aer Lingus, which would have come as a surprise to investors in the debt and capital markets. It was clear to people external to Aer Lingus that the Irish Government is a 25% shareholder and can have board representation but other than its ability to block a sale, with the assistance of other shareholders holding a minimum of 5%, it cannot exercise any other influence over the active management, development and strategic direction of Aer Lingus. Statements were made that suggested that the Government could and would interfere. I do not believe the statements necessarily meant that but the interpretation relayed to me by some people was that such suggestions were not helpful.