Mr. Willie Walsh:

First, let me address the concern expressed on Qatar Airways. The airline has taken a 10% stake in IAG. As with many companies in the airline industry, there is a limitation on the allowable amount of non-EU ownership. Qatar Airways holds 10% but we currently have non-EU ownership extending to approximately 36% of our stock. Under our articles, the board has the ability to limit the amount of non-EU ownership so long as that limit is not less than 40%. Therefore, there is no prospect whatsoever of Qatar Airways being able to gain control of IAG. It is not legally possible.

The Deputy asked many questions and I will try to recall them all. With regard to Shannon and Cork airports, the Deputy and I have exchanged views on the former. The last time I was here was October 2004, more than ten years ago. Some of the issues we are debating today were debated then. I believe the Deputy is the only current committee member who was a member then. On Shannon and Cork, I can understand the concern that has been expressed, particularly the concern expressed in Shannon because of what happened with the Shannon–Heathrow service in 2007. It might be helpful for members to understand what was behind the Aer Lingus decision back then. A couple of points arise in this regard. I have some information on Aer Lingus that has been provided to us under non-disclosure arrangements. I have not been directly involved in the due diligence process but my team has been. Separate to that, let me talk about what I have said publicly about Shannon and Cork historically. I would genuinely be very shocked if I discovered the operation of the Shannon–Heathrow and Cork–Heathrow services was not profitable for Aer Lingus. I know Dublin is profitable because we operate on the route. I know from my history with Aer Lingus what the situation was in the airline, but that was a long time ago and many things have changed in the interim. The services are profitable on a stand-alone basis.

One of the advantages of the current relationship Aer Lingus has with British Airways — it has other relationships — is that we feed traffic to one another on the services. We feed traffic from Heathrow on to Aer Lingus flying to both Cork and Shannon, and Aer Lingus feeds traffic from Shannon and Cork on to British Airways services, principally long-haul services. We are the number one partner that Aer Lingus has in respect of its transfer traffic. Not only are those routes profitable in isolation, but the value of the transfer traffic we provide to one another is extremely valuable also. Therefore, the commercial reality is that there is no reason for anybody to be concerned about the operation of the routes because they are profitable in isolation and have significant additional value because of transfer traffic.

In 2007, Aer Lingus terminated the Shannon–Heathrow service. I watched that with great interest because the principal reason for it was that Shannon Airport made a deal with a competitor of Aer Lingus to facilitate its entry into the Shannon–London market. The competitor was receiving free services or low charges in Shannon and Aer Lingus was paying the rack rate for services. Aer Lingus was being significantly disadvantaged as a result of a competitor being given much cheaper access to Shannon. Commercially, it is madness. I cannot understand why Shannon Airport did what it did at the time. I expressed that view to the people running Shannon Airport when it happened. I was pleased to see the issue was resolved and that Aer Lingus subsequently went back into Shannon.

When I look at the traffic flows between Cork and Heathrow, and Shannon and Heathrow, I note the flows from both Cork and Shannon airports are what I have described as very good. This is especially the case with Cork, where the volume of traffic has remained steady. It has actually grown in recent years but, significantly, remained steady through the recession. This was unique given what happened everywhere else during that period. The traffic out of Shannon to Heathrow has declined in recent years. I am not clear whether there is something in the scheduling behind it. It is a matter we can certainly examine in much closer detail. The routes are sustainable in isolation and I assume they continue to be very profitable for Aer Lingus. We would want to retain them but also we would want to examine opportunities to feed additional traffic on to them, thereby continuing to enhance not only the profitability and viability but also the attractiveness of the destinations.

It has been stated by people who have appeared before the committee that the only reason British Airways is flying between London and Dublin is because some unknown UK regulator — I do not know who it is — has forced it to do so. That is complete nonsense. There is absolutely no requirement from any regulator for British Airways to serve the Heathrow–Dublin route. British Airways serves the Heathrow–Dublin route because it wants to. Not only has British Airways continued to serve Dublin by building on the service that BMI used to provide, we have actually started additional services into Dublin with a service from London City Airport. We are one of the biggest operators. Obviously, there are two very big operators in the form of Aer Lingus and Ryanair at Dublin. Number three is Aer Lingus Regional, and we are number four in terms of the number of services we provide to Dublin. We provide the services because we want to. There is absolutely no obligation and no regulator requires it. Whoever suggested there is such a requirement is talking complete nonsense and does not understand the rules.

We would continue to serve the market in question because we want to. Ireland is an attractive market for us. It is particularly attractive because we believe it represents growth opportunities. The development of the transatlantic services, principally over the Dublin hub, represents a real growth opportunity. We can support that better than anybody else because we can bring the strength of IAG, at one end of the route, and the strength of our joint business partner, American Airlines, at the other. Instead of having Aer Lingus operate with a small sales team in the United States, we would harness the full strength of the British Airways and American teams selling that service in the US and of the IAG sales team selling it in Europe. That is something Aer Lingus cannot access in isolation. As a stand-alone airline, regardless of the number of partnerships it seeks to develop, it cannot get that amount of support. We are the only people who can provide it. We want to provide it to Aer Lingus because we see this as a fantastic opportunity to grow the traffic out of Ireland on the transatlantic routes, which would have direct benefits in terms of jobs in Ireland and significant indirect benefits through tourism and indirect job creation in the Irish market.

I said we have smart lawyers working on this. I am sure the Taoiseach and the Department of Transport, Tourism and Sport will have smart lawyers working with our smart lawyers. We believe there is a legal framework in existence that can provide the Government with a guarantee. It is not a case of my giving the committee some nice words about a guarantee over Heathrow slots but of my telling the committee we have tested this. We are very confident a structure can be put in place to give a cast-iron, wrapped in concrete guarantee that the control of those Heathrow slots will remain with Aer Lingus management in Dublin and that the Government can intervene. Without explicit support, Aer Lingus would not be able to sell any of the slots.

The issue of jobs has been mentioned. I fully understand the concern over jobs. I have heard people saying 1,200 jobs would be lost. That is utter nonsense. The example that was given to support the statement was what happened with Iberia. One must realise that where Iberia was during the period of reconstruction and where Aer Lingus is are two completely different places. Aer Lingus has gone through the restructuring. Aer Lingus is an efficient airline and could be more efficient but Iberia was an inefficient airline that got trapped in a really deep recession that hit Spain in the way it hit many countries, including Ireland.

Iberia required serious and immediate restructuring. Aer Lingus is not in that position. Will there be rationalisation as a result of Aer Lingus being part of IAG? Yes, there will be because we have centralised certain activities with procurement probably being the best example. We do procurement for everybody in the group through a central source. That generates huge value. We can negotiate with every supplier in a way that is much stronger than any airline can do individually. Aer Lingus can tap into the value of that, which is immense. I am not talking about millions. I am talking about tens of millions and potentially significantly more than that.

The real story behind what we want to do is growth. It is all about growth. It is about growing the Aer Lingus network and with that growth comes growth in jobs, which are quality jobs that would be based in Ireland. The rule of thumb is that the addition of long-haul aircraft would typically mean an additional 100 direct employees - plus or minus ten. Every long-haul aircraft that gets added will add jobs. Every long-haul aircraft that gets added at a hub requires short-haul aircraft to feed traffic into that hub for it to be efficient. The committee can see that with the direct addition of long-haul aircraft, we will get the indirect benefit of a growing short-haul network feeding more traffic which is the ambition of the Irish Government under its draft aviation policy, the DAA under its stated policy and Aer Lingus. We can support that in a way nobody else can.