Mr. Stephen Kavanagh:

Aer Lingus believes that opportunities are growing to serve Europe and compete for traffic between Europe and North America. Having had discussions with representatives of IAG and, indeed, listened to their contribution to the Joint Committee on Transport and Communications, it is apparent that IAG shares the same view as to the value of these opportunities; hence the proposal. What is the opportunity? Aer Lingus carried 1.3 million customers across the Atlantic last year and one in three of those customers was travelling between Europe and North America. That additional business provided Aer Lingus with the ability to grow and sustain the frequency of existing services between Dublin or Shannon and North America. Without that access to Europe and North American traffic, Aer Lingus would not be able to sustain the existing shape of the Aer Lingus transatlantic service.

That traffic also has a positive contribution to our short-haul network. Simply put, if a passenger is travelling between Boston and Paris, Aer Lingus carries them to Dublin on the Atlantic aircraft. It supports our connectivity to the UK and Europe and complements the natural demand between Ireland and the UK and Europe. Aer Lingus sees this on a standalone basis as something that will allow it to grow into the future. It will be challenging. It is not without risk, given the scale of Aer Lingus and the shocks that are a feature of the aviation business. However, it is a strategy that, as one can see from our financial results in recent years, has worked. Aer Lingus believes that the geographic advantages that Ireland delivers in this regard are central to the proposition. Rather than viewing Ireland's remote island status on the western periphery of Europe as a disadvantage, in this particular instance it is a key advantage. It is an advantage from the customer's perspective because the time to traverse the Atlantic through Dublin is faster. From an airline's perspective, the quicker the journey, the lower the cost. The geography gives us natural economic advantages in serving the market. The State has made the appropriate investments in terms of airport infrastructure. The customs and border patrol facilities at Shannon Airport and Dublin Airport give Aer Lingus an added advantage.

What is the additional opportunity with regard to IAG? It is, in essence, scale. Aer Lingus by itself will fight for its place in the market. It has done so for close to 80 years and it will continue to do so. What IAG brings to Aer Lingus is the ability to join forces; particularly in the Atlantic joint business, to have four airlines selling Aer Lingus seats as if they were their own allows Aer Lingus to compete. It allows Aer Lingus to have more confidence in terms of the number of customers it can reach. It allows Aer Lingus to have more confidence in terms of the costs to those customers because of the economies of scale. Ultimately, it de-risks expansion for Aer Lingus. The approach of four airlines selling jointly will accelerate opportunities that it would otherwise be challenging for Aer Lingus to exploit on its own. This is a fast-track approach.

The positives from an Aer Lingus perspective are not just to do with the Atlantic. As I referenced earlier, those passengers have to be flown from the UK and Europe, hence the partnership with Stobart Air. One hundred thousand customers use Stobart Air services. More than 300,000 customers use Aer Lingus mainline transatlantic services from Dublin and Shannon. Those services will be positively impacted not just by the incremental flow across the Atlantic but, further, by membership of the Oneworld alliance, as proposed by IAG, because in that instance there would be 15 global airlines selling seats to Shannon and Cork and Dublin. So Aer Lingus sees the benefits in terms of the opportunity for accelerated growth. In the absence of such a deal, the challenges will remain but there will be fewer opportunities and higher risks. That scenario has direct implications for the confidence with which investment can be made.

Those are the circumstances under which we have no hesitation in recommending the proposal on the basis that it would be positive for Aer Lingus shareholders, for employees, for all stakeholders and ultimately for Ireland Inc. in terms of utilising the geographical advantages and retaining that economic opportunity within this economy.