Mr. Christoph Mueller:

I thank the Chairman for giving me the opportunity to address the committee, to introduce myself properly and to enter into an open exchange of views. I have studied the committee's recent report on the post office network and feel that in certain areas the committee might be more educated than I am when it comes to the subject. I will introduce myself briefly, share some views and then we can start the question and answer session.

My name is Christoph Mueller. I am 51 years old and arrived in Ireland approximately three and a half years ago to take up the role of chief executive of Aer Lingus. I am married to Florence, a former long-haul pilot. We have three children and we live in Howth. I joined Aer Lingus in September 2009 when the task at hand was obvious. Aer Lingus had accumulated losses of almost €100 million in 2009 as a consequence of the financial crisis and the collapse of the financial markets. If I might say so, we have fixed the situation since then. Aer Lingus has just published its annual accounts for 2012 which was our third consecutive profitable year. We are now the fourth most profitable airline in Europe. That was accompanied by a lot of structural and strategic changes and of course I can provide further evidence of this in a different capacity.

I would like to shed some light on my education which I believe is relevant because I have engaged throughout my life in certain areas which might be of interest to the committee. After a normal high school career I joined the German army where, instead of doing my mandatory 15 months' service, I opted to do two years and became an officer of the logistic forces. Ever since I have been involved in questions of logistics of different types, postal, freight forwarding, tourism and, as I have mentioned, aviation. After my military service I accomplished a three year apprenticeship programme which is very popular in Germany and is comparable to becoming a chartered accountant here in Ireland. Parallel to that practical education, I completed my masters in business administration at the University of Cologne. During my studies I concentrated on production planning and just-in-time concepts which surprisingly come from the postal network so at an early stage in my academic career I focused on that.

After my academic career I made a couple of career moves. After completing my masters degree I joined Lufthansa as an internal auditor. I left Lufthansa after a couple of years to become financial controller of Airbus Industry. I went to eastern Germany after reunification for my first big restructuring project, in a maintenance and repair company of 3,500 employees. I rejoined Lufthansa in 1994 for five years and was first executive vice president for financial control and later became the head of corporate planning, also as an executive vice president. I left the company to re-structure Sabena, the Belgian State-owned airline at the time. Due to the demise of Swissair in the immediate aftermath of the terrorist attacks in the United States on 11 September 2001, Sabena also went into bankruptcy. Swissair was the second largest shareholder in the company, with 49%. The Belgian Government then asked me to privatise the remaining subsidiaries of Sabena which comprised half of the group. That took me almost a year.

I then joined DHL. Before it was taken over by Deutsche Post it was an independent enterprise with a turnover of approximately €26 billion in 2003. I became its chief financial officer. The administration of DHL in terms of its global operation was headquartered in Brussels. I spent very few days of the year in Brussels as it was a job with a global distribution network. I travelled and during that time I spent a year in the United States in order to turn around the US business. It was taken over by Deutsche Post and I joined the framework in terms of the merger and its executive committee in Bonn and got a lot of insight into not only the express business, which is from where I was coming, but also postal services and financial services. Postbank was taken over by Deutsche Bank in the meantime and it was the most profitable arm of Deutsche Post after privatisation. I spent another two years on the executive committee in Bonn in a post-merger integration phrase.

I then joined TUI, a DAX 30 company, which is a German conglomerate whose main interests are in shipping and tourism. At the time it owned five airlines in Europe, for which I took responsibility. We then merged TUI tourism activities with First Choice, the members might recall the name from the UK tourism market. TUI Travel today is the largest tourism provider in the world with a turnover of approximately €25 billion. That was my last career station before I joined Aer Lingus.

Apart from my obligation as chief executive officer of Aer Lingus, I am the chairman of the advisory board of Eurocontrol in Brussels, which, as some members might know, is the central air traffic control agency controlling the upper air space in Europe and it will most probably become the nucleus of a joint European sky initiative. I was invited to join Tourism Ireland one and a half years ago and I sit on its board. That gives members an idea of the background from where I coming.

I feel very honoured having been approached to take up the chairmanship of An Post. It is a huge responsibility but it is also an important obligation. I have followed the development of the postal sector since the European Commission issued a Green Paper in 1992. That was the starting point when the then member states of the European Union, which number slightly fewer than today, came to the conclusion that the postal sector in Europe was still too regulated and that competition was necessary. The White Paper in 1992 basically led to the big postal reform in 1997. It is important to recognise that in 1997 the framework for the sector was set and we are still operating within it. The postal reform recommendations stated clearly that we have to optimise the access, the affordability of the product, prices should be free floating, consumer satisfaction and quality of service are essential, and competition needs to be introduced. That is still the challenge at hand today to balance what are sometimes conflicting targets such as access, affordability, consumer satisfaction and prices and that all needs to be achieved in a competitive environment.

Ireland has not been in the front row of liberalisation and privatisation. Different clusters of countries in Europe took different approaches to fulfil their targets. Total liberalisation took place, as the members know, in the Netherlands, Sweden, Finland, the UK and in Germany. There was a segmented approach to postal liberalisation in Spain, Italy and the Czech Republic, and Ireland still kept the weight threshold it held in order to mitigate in this respect in terms of the postal service we have had from the late 1990s up to today.

A consequence of the postal reform can be recognised all over Europe. Next day delivery is now standard. I remind the committee that in 2009 when the last benchmark took place on a European level, the quality standard of D+1, the overnight service, was not sufficient in Ireland. Huge progress has been made in the past few years. If one studied the 2012 annual report, one would note that if that measurement were to take place today, Ireland would be ranked among the first in that we have an overnight service. The quality of service has improved tremendously while productivity has also increased.

Prices remain affordable. A tendency that has emerged is that the number of post offices have been reduced - which will be of interest to the committee - sometimes in favour of franchise takers and of postmasters. Many post offices throughout Europe have been closed. That is a matter of concern for this committee and for broader society in that in many European counties I witness similar discussions about this.

Structural changes are still not complete. That is certainly attributable to a very fast moving technology cycle, not only to new sorting technology but to labelling and not only barcode but RFID labelling, and all these types of technology will enable a more efficient service into the future. Apart from the postal service, members will have recognised that the express market is growing very fast. It does not stick only to its traditional passer business but increasingly it tries to take in what has been traditionally the home turf of the post offices.

That is a short overview of where I am coming from. It may be more useful to immediately enter into a question and answer session and I can answer those questions which are most important for the members.